As I write, over the past 24 hours, we have – once again – seen just how quickly market conditions can shift, and while the immediate reaction has been positive in terms of swap rates easing, the speed of that change should serve as a reminder that stability in the current environment can be short-lived.
The announcement of a two-week ceasefire in the Iran-US-Israel conflict has led to an almost immediate drop in swap rates, with markets reacting immediately, and the expectation now is lenders will begin to reprice products accordingly.
However, the key issue is this is a short-term development with no certainty beyond that two-week window, and recent experience should serve as a stark reminder just how quickly sentiment can reverse if underlying conditions change.
Broker behaviour
If we look at our own data from March and across Q1, the picture is very clear in terms of how brokers reacted when faced with sudden market movement and potential risk to client outcomes.
In mid-March, we reported a sharp spike in instructions as lenders withdrew products and repriced at pace, with brokers accelerating cases in order to secure deals before they disappeared.
That behaviour was not gradual, and neither was the impact, and when we look at the full Q1 picture, it is evident a significant volume of business was brought forward into that period, particularly within the remortgage space where clients were able to act more quickly and advisers had greater control over timing.
This reinforces the point that broker and borrower activity has to shift just as quickly as the market itself, and those shifts are also translating immediately into conveyancing activity as part of a single process.
What happens next
The question now is whether the latest movement in swap rates leads to another surge in activity or whether we see a short-term slowdown following the volume of business that was brought forward into March.
There is a strong argument that some of the activity expected in Q2 has already been completed or is well underway, which could result in a quieter period as that pipeline works through, particularly if clients who acted quickly in March are now less inclined to make further changes.
At the same time, if lenders move quickly to improve pricing, we may see another wave of demand – we should all be clear better mortgage pricing fuels greater levels of interest and activity – but given how quickly conditions have shifted, there will also be clients who might prefer to wait for a more settled outlook before making decisions.
Adviser judgement
In a market that can change direction in a matter of hours, let alone days, adviser judgement becomes even more important, because decisions are no longer based on steady trends but on rapidly changing circumstances and conditions.
Some clients will need to act quickly to secure improved rates if they become available, while others may be better served by taking a more cautious approach, particularly if their current arrangements remain suitable. If your mortgage doesn’t mature until the end of the year, there is no point jumping the gun now.
There is no single approach that fits all, and the role of the adviser is to weigh these factors carefully and act in line with the client’s best interests.
Full advice picture
This is where the wider Consumer Duty focus becomes critical, because in uncertain conditions it is not enough to secure a mortgage rate alone, and advisers need to ensure all aspects of the client’s position are properly addressed.
That includes protection and general insurance, but also the conveyancing process, which has become an integral part of securing a successful outcome rather than a later step in the process.
As we saw in March, when brokers act quickly, the legal process needs to keep pace, and any delay at that stage can put the entire transaction at risk.
Staying prepared
What recent events have shown is that the market can shift in a day, and while short-term improvements in pricing are welcome, they do not remove the underlying uncertainty.
Brokers will need to remain alert, be ready to act when opportunities arise, but also be prepared for conditions to change again just as quickly.
Whether the coming days and weeks bring another surge in activity or a period of reduced volumes, the priority remains the same, ensuring clients are fully supported across every part of the process and are able to receive the right outcome regardless of which way the geopolitical winds are blowing.
Harpal Singh is CEO at conveybuddy