Gerard Boon (pictured top), managing director of Boon Brokers, told Mortgage Introducer the mood among clients and brokers has turned firmly pessimistic. “The general mood is one of uncertainty and pessimism from clients and brokers in the industry,” he said. “An incoming change of prime minister and ongoing uncertainty surrounding the war in Iran, and its impact on future energy prices, has left a feeling of dread amongst clients and brokers for the future.”
Boon pointed to Zoopla data, which he said shows 60% of listed properties are yet to find a buyer since listing in January. He did, however, note one bright spot, with recent interest rate cuts from lenders aimed at reviving demand.
Down-valuations are hitting borrowers hardest
For Boon, the sharpest pain point right now is down-valuations, particularly for clients who borrowed at high loan-to-value (LTV) ratios above 90%. “The prospect of negative equity is now a genuine concern, especially for those borrowers with buy-to-let properties or high-valued properties in the south of England,” he said.
Boon cited one recent case where a client’s buy-to-let house in multiple occupation (HMO), bought for £360,000, was valued at just £290,000. “Even though this is an extreme scenario, my brokers are encountering down-valuations on a daily basis, which are causing issues for clients looking to remortgage or sell their properties.” The pattern echoes wider industry concern over rising down valuations across the remortgage market, and mirrors the growing valuation pressures facing flat owners reported elsewhere this year.
How should brokers advise clients through geopolitical shocks?
Boon is firm that advice shouldn’t chase headlines. “Due to the volatility of the mortgage market over recent years, I believe it’s unwise to advise products to clients on the basis of external shocks,” he said. “Clients should always proceed with the most suitable product for their unique situation.”