We need lenders' help to sustain market recovery

8 March 2010

The doom mongers are alive and well as talk of a double dip recession raises its ugly head once more. Should we be worried? According to the pundits there are numerous reasons to fear a double dip in the mortgage market.

The upcoming general election and possible change of government is the most cited likely cause of another dip.
It is likely that sterling will be weak due to uncertainty over the outcome of the election, and while concern grows about the public finances a dwindling Conservative lead in the polls is heightening fears of a hung parliament.

Meanwhile, the Greek crisis is generating uncertainty with regard to sovereign debt.

Combine all this with events such as the Monetary Policy Committee’s recent minutes stating that output data has been disappointingly weak and there’s a serious risk of a second downturn in activity, and you could be forgiven for thinking the worst.

We rarely see - or get to read about - positive signs in the market. For example, across our brands sales have been up since the start of the year compared with last year’s figures.

Mortgage lending has risen accordingly and we recorded a 100% increase in remortgages in February 2010 compared with the previous month. But remortgages still only account for 14% of total business written in February.

Housing transactions will improve as interest rates stay low and more stock comes onto the market

Another thing our gloomier commentators omit is that there are now many more mortgage products available.

Figures from Mortgage Brain show there were 4,829 mortgage products available on February 20 this year compared with a low of 2,301 in July last year.

The latest figure is also up on the number of deals at the start of the year - the total was 3,534 in January.

So what will happen? Well, I think housing transactions will continue to improve while interest rates remain low and more stock comes onto the market.

Mortgage availability will also improve and lenders will become increasingly competitive.

Of course, there will be a few jitters along the way - especially around the time of the election - but overall we will look back on 2010 as a better year, with businesses that have survived the recession showing increased profitability.

But we need help from lenders to bring first-time buyers back into the market and to offer more help in the new-build sector.

It is disappointing that some initiatives such as guarantor schemes are disappearing. I am sure this is an area where brokers have missed a trick so lenders have withdrawn them due to lack of support.

Surely it is more palatable and affordable for parents to offer limited guarantees rather than have to place a big chunk of cash on deposit.

New building has consistently fallen short of government targets and the party that ends up in power will have the chance to stimulate the sector while developing more social housing.

In summary, there will be some boulders on the runway this year but overall the market is set for continuing recovery.

It is vital that lenders increase first-time buyer support because this, coupled with improving market confidence, will boost the whole mortgage market.