Information overload

15 Jul 2010

In this business with so many varying demands on time it’s often difficult to immerse yourself in the wealth of information and data that is published on a daily basis. 

One often has to ‘make do’ with scanning the headlines while only delving into what you might term the ‘essential stories’. 

However, having stolen some time out with my family recently I found myself with the unusual luxury of being able to catch-up on both the trade and consumer media with the ambition to get an up-to-date handle on events and issues.

Having done so I came away feeling rather confused and, given that I actually work in financial services, I had a great degree of sympathy for fellow professionals and in particular ‘Joe Public’ who may not be as well-informed. 

The fact of the matter is that contradictions abound where the published streams of data and headlines coming out in the marketplace certainly do not offer either the consistency or clarity that is so often sought. 

Whereas one day you could read a piece which paints a gloomy picture and suggests we are entering another recession, the next we may be told that the worst is over and the country is on the verge of real recovery – albeit a very mild one.

One prime example of this is in respect to house price data. 

In the space of a day last month we had both the Nationwide Building Society and the Halifax providing vastly different analyses of UK house prices.  

Nationwide’s monthly index showed a 0.5% increase for May; its average house price figure had risen by more than £15k since last year with much of the media picking up on the fact that this is only £10k less than the peak of 2007. 

Halifax on the other hand showed a 0.4% monthly fall in prices for May and here the media ran with the viewpoint from the Halifax that this shows the housing market will remain flat or ‘stagnate’ for the rest of 2010. 

Such contradictory news is not new I know, but its impact today particularly on confidence levels is very telling.

Incredibly, the same media outlets that 24 hours earlier had said it was all ‘happy days’ for the market – because of the Nationwide data – were then only too willing to take up Halifax’s slightly more depressing (and perhaps more realistic) viewpoint a few days later. 

These are not the only indices published with others from RICS or the Land Registry also fuelling the fire about what is (or is not) truly happening to UK house prices.

Other examples of the same ‘glass half full/half empty’ information dichotomy are freely available. 

The Government’s intention to raise CGT in the emergency Budget was also analysed to within an inch of its life particularly with regard to the perceived effect on buy-to-let landlords and how it might have impacted on their potential plans for their properties. 

There was much media chatter about the impending collapse of the buy-to-let market if the CGT rise introduced was too high however amongst all that I also found a number of comment pieces which suggested there would be no noticeable negative impact and that buy-to-let would continue its market rehabilitation. 

At the end of the day we should remember that this was all pre-Budget speculation and the eventual increase was far less than most had anticipated with the result that most commentators now feel it will have little or no effect on the buy-to-let market anyway.

The ease with which we can now access all kinds of information is of course a wonderful positive of the internet age. 

However with so much information to choose from it is increasingly difficult, particularly for those who have only a small amount of understanding, to ascertain exactly what the truth of the situation is. 

In mortgage circles this can be particularly hard – take a look at any of the consumer finance sections of our national newspapers and you will understand. 

Within a few days I saw articles which said that now was the time to think about a tracker product because Bank Base Rate was likely to stay low for some time, only to find pieces suggesting that with inflation so high, some economists were anticipating early increases to BBR which meant now was the time to think about a fixed rate deal. 

It’s no wonder Joe Public is seeking another route through the minefield.

This is where mortgage advisers earn their keep and prove their worth.  The press and the internet can offer consumers a wealth of information to translate but for the majority of consumers this can turn into an ‘overload’ situation. 

As recent figures from IMLA reveal, advisers are still delivering the majority of lending business rather than direct distribution. 

This is because consumers want to kn ow they are in the hands of a professional who understands the whole of market and has the necessary qualifications and expertise to advise in what is a quite complicated area. 

Advisers should certainly be using their marketing prowess and nous to highlight their key benefits to potential clients particularly in a media age which often raises far more questions than it delivers answers.

Bob Hunt

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