Member Article

The impact of the housing market on CRM

As the number of houses selling for a figure above the original asking price hits a new record high and fixed rate mortgages (especially in the three year bracket) were falling it seems both buyers and sellers are happy but this is not the case for everyone with a mortgage.

Between those selling their house for top dollar and those buying with an unbelievable mortgage rate sit a large group of people referred to as “mortgage prisoners”. They are trapped in a mortgage with a high rate of payment and are unable to switch to a cheaper deal because they don’t meet strict borrowing criteria that was brought in due to the 2008 financial crisis. What is a massive bone of contention for many of these people, is that of the estimated 250,000 households in the U.K. in this situation, most of them have mortgages with firms now inactive due to the crisis. They find themselves paying tens of thousands of pounds more than their neighbours for a same priced house and even the same amount of money borrowed but despite keeping up with payments they are told that “they can’t afford a cheaper deal”.

The Financial Conduct Authority (FCA) has launched a review into this situation as it’s admitted that assumptions it made led to a low estimate of the number of people who have mortgages with inactive firms. It is a dilemma that Martin Lewis and his website Money Saving Expert have long campaigned about and it is something the Chancellor has agreed should be looked into. The findings of the FCA’s review will be presented to Parliament by the end of the year although it comes after MPs voted against proposed amendments to the Financial Services Bill which would have seen rates capped for certain mortgage prisoners.

This is a situation that looks like it will eventually be remedied and if action is taken it will also impact the wider mortgage market making it even more active than it is already. The housing market is currently at its most buoyant as a result of the Chancellor’s stamp duty holiday, an initiative designed to kick-start the economy, and the generous fiscal policy introduced over lockdown. Currently, there are more than 500,000 people extra in the moving journey than usual and estate agents are running out of houses to sell, with an average of just two months of stick on the books. Latest figures suggest that despite the stamp duty coming to an end in September, the market is still hot. Over half a million households are still saying that they are planning to start the moving process over the next quarter. This, combined with a solution for the mortgage prisoners will inevitably lead to more houses changing hands. A study by Wilmington Millennium revealed that when people move house they have an average of 39 essential or important organisations to tell they have moved house. This takes approximately 10 hours to carry out. These organisations include utility providers; financial services providers such as banks and credit cards; government bodies including the DVLA, HMRC, Child Benefit; online accounts such as Paypal and Amazon and loyalty card providers including Clubcard and John Lewis which send vouchers through the mail. In addition to these, there are also scores of other companies that homemovers do not deem essential or important to tell such as charities, retailers, hospitality companies and often these organisations are left uninformed, meaning that their data is inaccurate.

With more people moving house, it stands to reason that more customer data will be inaccurate and this could serve to diminish the effectiveness of CRM initiatives. CRM is only as powerful as the data within it. It is therefore critical that this data is kept as up to date as possible or risk lower ROI, flawed analytics and potential non-compliance to GDPR.

Martin Rides, Managing Director, The Software Bureau and Clean Contacts

This was posted in Bdaily's Members' News section by The Software Bureau .