The one thing guaranteed about the start of any year is that people will look back at the year just gone to try and decide whether it was a good one or not while also taking a hopeful glance into the future except in the case of the French who protested at the coming of the New Year, having concluded that 2006 had been an excellent year so why did they need a new one?
The tendency to look into the future in this country means we have the usual round of predictions about the growth in house prices from just about anyone who has anything to do with the housing market.
Of these, Halifax and Nationwide are probably considered as providing the most reliable information on house price growth and therefore probably also the most reliable predictions about what the market is going to do in the year ahead. But last year they both got it wrong.
This is nothing bad in itself. After all, few mortgage intermediaries would have predicted house price growth of 12% in 2006.
This year the predictions are in again with Halifax predicting annual house price inflation of 4%. Nationwide has been a bit braver, predicting average house prices will grow by between 5% and 8% during the course of 2007. This is obviously based on the surprisingly strong some might even say exceptional growth of last year. But this prediction might not be that wide of the mark.
In light of the recent rise in the base rate it is clear the Bank of England wants to constrain housing market growth, seeing this as a contributing factor to wider economic inflation. (Just as a way of pointing out how difficult making predictions is. Nationwide predicted the base rate had probably peaked at 5%, before hedging its bets at the beginning of January when it realised the Monetary Policy Committee was not done raising rates just yet.)
So mortgage distributors and intermediaries alike look set to face a more challenging year as 2007 begins.
House prices have grown to six times average earnings for the first time since 1988 and mortgage lending is, so the Council of Mortgage Lenders tells us, at its highest ever level. Meanwhile, Halifax claims that the proportion of first-time buyers getting a foot on the property ladder is at its lowest level in 26 years.
Which all leads me to my prediction 2007 will be a year in which distributors will play a huge role in the market and it will be a year in which lenders, despite their efforts to obtain more business direct from brokers, will find themselves relying heavily on distributors to bring them volume and meet targets.
Not every lender will do this. Given the number of lenders in the market it would be impossible for all of them to lend as much as they say they will. But those with excellent relationships with distributors, that work with their distribution partners to create innovative products and that are brave enough to allow their distributors to push the boundaries in product development and design are the most likely to look back on 2007 and consider it to have been a good year.
With this in mind the upcoming Packager Summit will be a good opportunity for the industry to discuss the ways in which distributors can help their lender partners achieve the business levels they want and help mortgage intermediaries keep up with the growing needs of their clients.
The emphasis this year will also certainly be on technology an area where the mortgage market has been lagging behind other industries for years and regulation. While it is tempting to say the mortgage industry has an obsession with regulation bordering on paranoia, recent regulatory enforcement action and the number of thematic reviews, either under way or recently completed, would suggest all involved in the mortgage industry would do well to keep regulation at the forefront of their minds this year.
The Financial Services Authority might not have fully understood the nuances of the mortgage market two years ago but it has been learning after all, as far as the FSA is concerned, we are all distributors now.
Matthew West, editor, Mortgage Distributor