Networks review

Your clients need you!

Shaun Almond

Managing director, HLPartnership

Do you know how many of your hard-won clients have fixed-rate mortgages that are going to end this year? Did you know that a record 1.5 million fixed-rate mortgage deals are due to expire in 2022, according to UK Finance, with the number of product transfers having grown from £157bn in 2018 and predicted to reach £276bn next year?

There is therefore every probability that included in that number might be some, or many, of your clients. Unless you have been living in a parallel universe where rates only ever go down, you will have seen the ominous evidence that mortgages are becoming more expensive, and while those of us with fixed rates can feel relieved, the simple truth is that, as inflation rises, everyone with a mortgage will eventually be affected if we enter a period of high rates.

To add to the gloom, the Bank of England increased its base rate to one per cent on 5 May and, according to no less a figure than the Chancellor of the Exchequer, the base rate could rise to 2.5 per cent by the end of the year – so, many more of your clients, especially those on variable or tracker rates, are going to need your help.

The immediate good news is that if a high proportion of your mortgage clients are on a fixed rate, monthly repayments will be unaffected for as long as those fixed terms last. So, along with the other roughly 74 per cent of mortgage holders who are on fixed-rate deals, your foresight in explaining the advantages of fixing their repayments will now prove their value. However, as those clients whose fixed rates come to an end this year will find out, going back to their lender’s variable rate is likely to produce considerable payment shock if the Chancellor’s prediction is realised.

With the continuing uncertainties in the financial markets and the wider international economy, further rate increases cannot be ruled out. Against this background, your role as a mortgage professional is going to be tested, because the need to set up a proper mortgage triage station to help clients is going to be vitally important for a number of reasons.

At HLPartnership, we encourage our network membership to take a proactive stance of regular contact with their client base by providing specific tools to help them as a matter of course. However, many brokers still prioritise new business from new contacts at the expense of existing ones. Of course, it’s important to spend time canvassing for new clients, but it’s a mistake to ignore your client bank because, unless they are being regularly serviced, they will leave you.

Now more than ever, when a customer’s fixed rate is due to finish, you can be sure that their existing lender will have been in touch to offer a new fixed deal or SVR. Why would you let anyone else get in there before you and steal your client away? And they won’t be the only ones. Relying on a customer to return to you runs the risk of making a big presumption, to say the least! There are other lenders and brokers like you who will be only too happy to take them from you.

While no one wants rate rises, this is as good a reason as any to be in touch with customers and offer to review their mortgage situation. Even if there is nothing you can do, you will have reignited the relationship and therefore the opportunity to talk about protection and other needs.

At the risk of getting a reputation for sounding like a broken record, please do take note that the data in your client bank is the most valuable asset you possess. Taking the analogy further, if you considered it to be valuable, wouldn’t you do everything you could to make sure it was secure? After all, you wouldn’t just leave a Rolex watch in the street, would you? Of course not.

So, pay your existing clients some attention. This rise in the base rate and the knock-on effect on lender rates is a heaven-sent opportunity to engage or re-engage. Don’t waste the chance.

There is an old saying: “Use it or lose it.” If you agree that your client bank is your biggest asset, don’t let anyone take it away from you. If you don’t value it, this industry will hold the door open while you leave. M I