POST LOCKDOWN
by Daniel Dunkley
Life after the lockdown What will the industry look like after the Covid-19 crisis?
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t the beginning of 2020, most mortgage brokers would have picked regulation as the biggest headwind for the year ahead. Yet four months in, a far more devastating issue has taken a grip on the industry. The Covid-19 pandemic has brought life to a standstill across the globe. In New Zealand, the level four lockdown closed all non-essential businesses and put a pause on economic activity in March and April. With no open homes, no auctions, and no viewings, the housing market ground to a halt. With transitional licensing delayed until next year due to the virus outbreak, regulation can take a back seat for now. The immediate concern for advisers is the recovery from the Covid crisis. The property market made a tentative return on April 29 as the nation went into level three lockdown, but it will be months before we return to normal. The property market is expected to decline significantly this year. ANZ has forecast a 10-15% drop in house prices, and credit conditions have tightened considerably for new Geoff borrowers. LVR Bawden restrictions have been lifted, but lenders have mainly shut up
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shop to new customers. Mortgage advice businesses have been plunged into uncertainty and chaos amid the Covid-19 crisis, prompting questions about how businesses will survive, and whether the sector will change forever. While level four lockdown was lifted on April 28, mortgage advice businesses are grappling with an unprecedented crisis and one of the sharpest recessions in history. Many will have gone a month without their usual levels of commission income. Businesses will face a financial crisis for the rest of the year. Advisers expect a considerable profit drop in April with hardly any settlements during the month. May is expected to be stronger, with a backlog of settlements to push through. But advisers are fearful for the rest of the year. One business-owner, talking to TMM in mid-April, said they have already made staff redundant. “It’s been a mixture of using the subsidy and letting a couple of staff go as we are a mainly salaried business,” the adviser said. “It’s an unusual time.” TMM asked brokers how the industry will recover from Covid-19. The sector will be forced to adapt to the new world. Some see it as an opportunity
for advisers to prove their worth to borrowers. Others expect more video technology and less of an emphasis on office work. How have advisers coped during the crisis? Have they adapted their businesses? What will life look like after the lockdown? And will companies change the way they operate? Advisers were hard at work improving their businesses during the lockdown. Most spent their time inundated with client requests, such as payment deferrals and switches to interest-only loans. Geoff Bawden, director of Bawden Consulting Group and head of Q Advisor Group, looked after existing clients during the period, but also took time to reassess how his business operates. “You can forget about making a lot of money for the time being,” Bawden says. “I looked critically at all of my fixed outgoings, asked myself whether they were necessary, and tried to reduce them the best I could. It’s amazing how much you can spend unnecessarily.”
" I’ve been looking at the amount of business we need to write to stay ahead of the game, and where that might come from. " Geoff Bawden
