Hang on in there and benefit from good times ahead
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With the second anniversary of the credit crunch fast approaching I thought it would be appropriate to take a look at the mortgage market past, present and future.
In the good old days there were around 120 lenders hungry for business. Now we are looking at about half a dozen banks funding the mortgage market.
The largest allocations are coming from Lloyds Banking Group, Abbey/Santander, Nationwide, the Royal Bank of Northern Rock.
Smaller lenders are working to tighter funding restrictions but are at least still lending and keeping their broker partners happy. Coventry and Leeds building societies along with In The Loop Mortgages are three creditable examples.
In the old days the buy-to-let market was substantial, with virtually every lender offering a buy-to-let product. Now we have BM Solutions and The Mortgage Works as key buy-to-let providers, with other players dipping in and out of the sector.
Back then every lender had a slightly adverse range while some offered full sub-primes ranges, but now there are around four lenders in the sector, the main ones being Platform Home Loans and Beacon Homeloans.
On Mortgage Day there were more than 100 networks. Now we are looking at around 15 and there is a strong possibility of more consolidation in the sector.
I seem to recall going on record as predicting that half a dozen networks would be left standing when asked a year or so ago. Back then, many thought that figure was too low but let’s wait and see.
Meanwhile, many well-known industry professionals have left the sector and are sadly missed, although I know they will reappear at some point.
So is there any good news before we get the razor blades out?
Yes. Brokers are entrepreneurs by nature and they won’t give up easily on businesses in which they have invested blood, sweat and tears.
They have also discovered the importance of insurance.
I’m not saying that many weren’t in that market before but it was never business-critical that insurance was sold. However, it is now because the extra income it provides is vital.
And green shoots are appearing and I refuse to believe otherwise. For example, house prices are up for the fourth consecutive month.
Also, last week I heard two lenders saying they wanted to “ratchet up volumes”. What sweet music those words were to my ears. Of course, they are not doing it yet but at least they are planning to.
Brokers too are getting excited about the business they will enjoy when the market returns because they will be reaping the benefits of insurance as well as mortgage income.
So when will all this happen? I reckon we’ll have to brave it out until at least May 2010, enduring a roller coaster ride until then.
There is no steady upward trend yet although most firms have reported July as a good month.
So the brave, the smart and the hardworking will survive and ultimately prosper. There is a green and gorgeous land ahead but we’ll all have to hang on until the economy turns and we can reap the benefits.
