Pricing has edged up 0.20% in the last few weeks and there is upward not downward pressure on mortgage rates and tightening criteria. Eurozone anxieties are a significant issue and there is no doubt that the uncertainty is not good for consumers.
We have had Santander retreating on interest-only LTV products and reviewing its lending criteria. It looks like it will certainly do a little less volume this year in the intermediary channel.
Let’s not forget though that it has been our leading supporter for the last two years and even with a mild retreat, it will still be our second biggest lender. So we shouldn’t overdo the pessimism, as Santander remains an integral and essential business partner to pretty much every broker reading this.
Lloyds Banking Group’s results made the headlines this month but its £28bn volume was still impressive even though its market share is the lowest for some time. I think there will be a concentration on the transaction side of the market from Lloyds group and that is encouraging.
The issue us brokers could face is that the remortgage market might not be as competitive as usual if our two biggest supporters are not looking to engage with it so much.
That said, this cloud could have a silver lining for other lenders as I think there are opportunities for Virgin Money, Nationwide, Coventry Building Society and Yorkshire Building Society to step into the breach with good quality remortgage offerings and a drive for more volume.
I am particularly excited by Nationwide’s product offering and appetite this year.
My advice to you all is to run ’buy now to beat the price rise’ campaigns for consumers as I think we will find that there are more changes still to come.
With all the results and flurry of activity we can make a few more informed predictions about the market size in 2012.
Looking to the lending volumes we could hope to see in 2012, given all the issues I have mentioned above, the gross lending we saw in 2011 at £140bn now looks a long way off.
If things go well we’ll see flat lending in 2012, although I think this slightly optimistic and we should all be looking at that as a maximum figure.
But I’m predicting that the buy-to-let market will go up again from £14bn to £16.5bn in 2012. I think the new-build market could go up by £1bn. I’ve no empirical evidence but I reckon it’s up from £7bn to £8.5bn in 2011.
These increases could come at a cost to the remortgage market and with interest rates looking stalled it’s difficult to see this sector growing materially.
Funding also looks like an issue in this area so I’d expect a relatively flat transaction market, and remortgage to come under further pressure in H2 2012.
The shape of transactions could also be a bit skewed this year. We have both the Olympics and Euro Championships – although given England’s past performance this could be less material than anticipated – so July/August transactions could be pushed into June and September.
But whatever the shape of transactions, it’s clear that we’ll need all the support we can get from our lending friends this year.
By the time you read this, the mortgage indemnity guarantee proposals will have moved from political chatter to real products. It will be interesting to see how automated these processes are and the full qualifying criteria.
I can’t wait to see the detail and get some applications in. If successful, it will be massive bonus to the balance sheets for house builders, which will build confidence in the wider market.
As I’ve said before, I’m getting positive about new-build after Bovis, Redrow, Barratt Developments and Galliford Try all reported positive results in the last few weeks.
Bovis alone saw a profits rise 74% for 2011 and a 41% increase in sales reserved this year. We’re hoping we have seen the bottom of the new-build market and with the major players buying land and starting to build again, I can see this specialised part of the industry growing more quickly than the main market.
With all the results out we can start to call the market in 2011 and attempt to anticipate what 2012 might bring.
It’s in times like these that we need to see innovation in the market and speaking of MIG, Manchester City Council is said to have initiated talks with lenders on a localised version of the scheme.
I hope other local authorities take stock and look at what they can do to help local buyers as in the absence of any Stamp Duty holiday and limited availability of 95% LTV funding, something needs to be done.
I am also encouraged to see that Manchester plans to use its pension fund to boost the chronic issues around affordable housing supply.
Winning night for all
It was great to see almost 1,000 people at the Mortgage Strategy Awards.
With my Countrywide hat on it was a shame to miss out on the best conveyancer award to my friend Nigel Hoath at eConveyancer, who, unusually, couldn’t afford a razor for the evening.
And a special mention is owed to my joint venture partner Peter Brodnicki who was thrilled with Mortage Advice Bureau getting the award for best general insurance broker. Well done to all the winners.