The past few weeks' events have taken us into unchartered territory and the unknown. For a country traditionally seen as fiscally sensible and politically stable, the events we've witnessed recently are akin to being on a rollercoaster.
A state of flux
Politics aside, the Markets are in a state of flux, creating nervousness impacting the secured and unsecured lending market. This ultimately means that products are being changed and removed. As a result, customers are being directly impacted, especially in key moments of truth, like buying their dream home or borrowing money to help buy a car or make home improvements.
While Sunak's appointment has helped calm the waters a little, many challenges are ahead. We need a fiscal plan, and this next Budget can't come quickly enough - the Markets need to know how we're going to tackle rising borrowing costs, a firmer indication of what interest rates might reach. Expectations have been priced in, but assumptions won't deliver products for lenders and borrowers alike. So there is a need for clarity, and any plan needs to be realistic, substantiated by facts and a robust strategy.
The customer impact
Lenders will continue to amend the products available in the short term to minimise any risk exposure, which at times continues to impact customers wanting to buy a property or re-mortgage. As such, the role of the lender or broker is key to helping get the right outcome for customers. We can hypothesise that interest rate changes are likely to stabilise the economy in the short term and drive down inflation, but this directly impacts the lending products available and customers' ability to secure approved mortgages. It's clear there will be pain for some customers with interest on repayments increasing, and that, combined with the rising cost of living, will put a lot of pressure on purse strings.
So what can the market do?
People are considering how they pay for basic amenities and cover their home bills and mortgages. As such we need to ensure we put the customer first in all of our activities and decision-making process. Whether it's a first-time buyer trying to manage forecasted higher mortgage repayments or those with years left on their mortgage, but with challenges ahead in terms of how they pay this off, we need to be engaging with customers regularly to ensure everyone is supported.
Education is a crucial factor - it's been over ten years since we last saw high-interest rates, and prices have been low for a considerable number of years, with many customers not experiencing such rises in inflation or interest rates. We need to put ourselves in the customer's shoes and ask, do customers actually understand their mortgages, their rate, how it might change and how this works? If not, it's up to us to change that and provide the relevant support.
Caring through the crisis
In the next few weeks, no matter how turbulent things get, every decision we make should have the customer at the centre. When it comes to lending and affordability, that's one thing, but payment plans, payment holidays or more serious conversations are well in our hands. This winter will be difficult, so it's up to us to deliver outcomes, not look for guidance from elsewhere. Consumer Duty has changed the game, so let's live by it and try to help everyone get through this challenging period.
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