View more on these topics

Doom-sayers could be right this time

In addition to welcoming a new year with exuberance and alcohol, many people see this as an opportunity to draw a line under the trials and tribulations of the previous 12 months and begin again with a clean sheet, a shed-load of good intentions and the sprightly step of renewed optimism.

Not so the prophets of doom. Banner headlines read ‘First-time buyers at record low’ and ‘House prices set to plummet’. Happy new year.

Although one of life’s eternal optimists, I suspect that this time there is more than a hint of truth in the pessimistic views on the housing market. Property prices have enjoyed an incredibly buoyant period and the market cycle suggests a correction is overdue.

This correction may have come sooner had it not been for lenders’ largesse that has seen them sanctioning the use of income multiples inflated to match demand.

I suspect that many of the recipients of this generosity will be less enamoured with their lot when they see interest rates pushing upwards and property prices falling back to meet them. It will be interesting to see the extent to which lenders – that have fuelled the upward movement of property prices with their misplaced generosity – will continue to raise the bar to flog their wares.

I don’t fall into the ‘We’re all doomed’ camp. Whatever correction we see this year will as always be a temporary check. But when it does arrive it may be longer lasting than we’ve seen for a while. High prices are hitting first-time buyers, without whom the market stagnates.

And the problem with vendors is that having sampled the heady brew of excessive paper profits they are reluctant to accept lower actual sums when it comes to selling. Adjusting prices to reflect the reality of the market is a slow and laborious task.

What else makes the pessimistic property pundits likely to be more accurate with their portents this time? Well, Home Information Packs for a start. This is the year of their predicted arrival and whatever their long-term impact, the short-term effect will be undoubtedly constrain the market. We will lose the spontaneity of the prospective sellers who take a punt to see what their property’s worth. This year it becomes an expensive option which will deter many.

So with record levels of personal debt, rising interest rates and the threat of negative equity lurking in the wings I fear the stage is set for many home owners to see a reversal of their fortunes, particularly in the South-East where the merry wives of Windsor may find their past borrowing decisions are a comedy of errors leading to a rather bleak house.

And on that contrived note I wish you all a healthy and prosperous new year – hope it won’t be an annus horribilis.


We should be bold enough to charge our clients fair fees

From Lee MartinI am writing in response to a recent article by Kevin Paterson headlined ‘Brokers, don’t sell yourselves short’ (Mortgage Strategy December 11). I agree wholeheartedly with him and the sentiments he puts forward in the article. All brokers should charge fees to clients. End of story. We do a great job for our […]

MEX appoints new key account manager

Mortgage Express has appointed Richard Freedman as a key account manager.Freedman joins Mortgage Express from Alliance & Leicester where he held the position of national account manager. He has over 10 years experience in the financial services sector and will predominantly be responsible for looking after southern based key accounts.Freedman will report to Louisa Sedgwick, […]

Make this the year of new brokers

The increasing importance of brokers in the mortgage market must be matched by an increase in the supply of fresh blood entering the profession, says Sally Laker

Interbay predicts further rate rises

Interbay has predicted that the surprise base rate rise will not be the only rate rise in 2007.This comes after the Monetary Policy Committee voted to raise the base rate to 5.25%.Colin Bell, operations director at InterBay, says: This months rate rise quickly became necessary due to excessive activity in the service sector at the […]


News and expert analysis straight to your inbox

Sign up