'I'm still submitting most of my mortgage cases in the 5%'

The technical director and senior mortgage broker at Private Finance says most of his clients are still being offered rates in the 5 per cent, and scaremongering about average rates is unhelpful as it further stagnates the market.

In July the average two-year fix was quoted by many media outlets as having reached a 15-year high of 6.66 per cent. There were also predictions of the Bank of England raising its base rate to 7 per cent, which could lift mortgage rates above 8 per cent.

But Sykes says: "In reality, I'm still submitting most of my cases in the 5 per cent. And I mean, granted some two-years are in the early, early 6 per cent, but the average rates that you read in the news and everything are average of all loan-to-value bands, adverse credit and quirky properties and debt consolidation.

The situation we're in isn't ideal with these rates. So sometimes non-ideal decisions have to be made to mitigate things in the short term.

"All of that all makes up the average, but the sort of average person, we're not in the middle of that average. We're probably going to a Santander or Nationwide or Halifax.

"So a lot of people are worried by the headlines that they see and the sort of unknown, and that really stagnates the property market in general. Especially if people aren't actually seeking advice of what's actually feasible."

A tough time

Private Finance is a London-based brokerage that operates throughout the UK. It's medium sized, directly authorised, and has about 40 staff of which about half are brokers working all across the country.

The firm likes to specialise in more complex cases and prides itself on the service it delivers to its clients.

Sykes says: "Often people say mortgages are the most stressful part of property buying process, but most of our clients say that the solicitors are the hardest part. Because we try and make it as easy as possible."

This service also means working late nights trying to secure mortgage rates before they are being pulled by the lender.

In the current market many lenders will give only short notice periods for pulling rates or products, leaving brokers to scramble for client files to complete applications.

We haven't had anywhere near the purchase volume that we have had over the past few years.

"It's very stressful, because you'll get that email at like three o'clock in the afternoon. And then you have to go through basically all the cases you've quoted over the past couple of weeks, you will then have to disturb the client at work... or on a boat trip.

"And then that client might have to rush to get your documentation, sign forms, we might have missing bits of information such as full three-year address history.

"Then it's just sort of working through those applications till they're done. Some lenders cut off at 8pm, some lenders cut off at 10pm, some lenders cut off at midnight. So we've had all ends of the spectrum."

He estimates during some busy weeks recently he saved clients as much as £100,000 a week by staying up late.

"Not every broker is physically able to do that. If I had kids and more responsibilities and things, I couldn't be necessarily doing all of this at their bath time. But then if you don't do it, you feel really bad that the client's missed out on this, even though it's not your fault."

Despite this, he does not put his chances of success very high on very fast turnaround times as it is often hard to get hold of all the documentation needed in time.

To alert clients to the potential need to act quickly, his firm has put in place risk warnings saying what is available today might not be available tomorrow.

But, unlike some of his peers, he does not think mortgage lenders are overreacting to the current market volatility. "They're having to react very quickly because their cost of funds are changing very quickly."

Looking back, the past three years have been "very tough for everyone" in the property market, he says.

"It's definitely had ups and downs. Ups obviously when the stamp duty holiday was going on and the race for space and everyone was rushing out to buy.

"We haven't had anywhere near the purchase volume that we have had over the past few years."

He says things were a "a lot simpler" when Sykes started his career in 2016. However, they were not particularly rosy times for the property sector either.

Buy-to-let borrowers were facing cuts to their mortgage interest rate relief and a new 3 per cent stamp duty was introduced on second homes. Plus, the market suffered under the 2016 Brexit referendum, which spooked many buyers.

Sykes entered mortgage advice after university. Having studied business and finance he was asked to go on a work placement after his second year, which he did at a mortgage brokerage run by a family friend.

The work became so endeared to him that he decided to study for his mortgage exams while completing his third year at uni.

"I actually joined Private Finance straight out of university," he says. "It had the finance side that I like, because I like working with numbers. I'm sort of good at that.

"Then it has the people skills because it's great working with clients and having those really long-term relationships.

"So it's really fulfilling in that way, that you get to help people through [buying their dream home]."

Sykes went from being a broker at Private Finance to being associate director and senior broker, until he landed his current role as technical director and senior broker.

This means he handles all the lender relationships, press work, and he is a broker as well.

This is a more or less typical journey for new recruits at Personal Finance, who are often straight from university and fresh to the industry, and who are then trained up in-house for 18 months in an employed capacity.

"During that they work under a senior broker to sort of get to know the market, get a large exposure to different types of cases and things.

"And then we put them through their exams while they're going through that. And then we let them start broking through us. So we don't have many people that we recruit, like from existing broker firms."

Changing tactics

In quieter times such as these, the work brokers are required to do changes somewhat. Sykes says he does a lot of work with existing clients, making sure they are locked into the best deals early, with an option to change at later date if needs be.

He also does a lot of work helping people who cannot refinance right now but need to prepare. 

"Work with your existing clients and put their minds at ease or set them up in terms of what they can do between now and, say, 2025 when they will need to refinance, to make sure they're in the best position possible then."

This is work done for free but it is work the clients need, he says.

In the current environment he finds borrowers are moving away from tracker mortgages and are mainly opting for two and even five-year fixes in search for certainty.

For anyone having to remortgage now, but who cannot afford the new rates, he advisers to either use cash savings or non-tax-efficient investments to pay down the mortgage, extend the mortgage term, or put some of the mortgage on interest-only, whichever is most suitable for the client's circumstances.

There has been a resurgence of interest-only mortgages, which has some people concerned, given the product's history.

But Sykes says the products have never disappeared to the extent people might think. Besides, these days lenders require evidence of credible repayment vehicles before agreeing to the deal, minimising the risk of creating mortgage prisoners somewhat.

Sykes says: "Obviously these solutions are sort of kicking the can down the road a little bit, because although rates will hopefully improve, they're not really projected to improve back to the 1 per cents or 2 per cents. 

"It's not ideal, but the situation we're in isn't ideal with these rates. So sometimes non-ideal decisions have to be made to mitigate things in the short term."

People's fate will depend on when rates start to creep down, and by how much, but this remains in the crystal ball for now.

But times are not bad, says Sykes. "Lenders are generally decent timescale wise at the moment, and they've got money to lend. So we're not in 2008 or anything like that, we're in a lot better position right now."

He adds: "It is a tougher time, brokers aren't earning as much as they have been used to over the past few years, but it's kind of a situation of weather the storm and things will be great again at any stage."

carmen.reichman@ft.com