The housing market has outperformed all expectations, while innovation and competition have intensified. These trends were confirmed with the dramatic upward revision of the Council of Mortgage Lenders’ predictions for 2006, which include the expectation of gross lending topping the 300bn mark for the first time.In February, when the CML was making its first round of predictions I felt it had misjudged the mood of the market, although predictions are notoriously difficult. Players in the housing and mortgage markets were feeling confident after the soft landing of 2005. Despite all this good news, readers of the mortgage press in the past month could be forgiven for being confused about the outlook for the rest of the year. There are mixed messages flying about. The CML’s predictions are strong but there is more worrying news of an expected rise in interest rates by the end of the year, with fixed rates already affected. This change in interest rate expectations means repossessions are likely to continue to rise moderately. Market confidence has taken a hit. Some writers have even taken the opportunity to put about scare stories of unsustainable debt mountains and accusations of irresponsible lending. Which of these outlooks is likely to prove most accurate? When we look at the evidence it is clear that the scaremongers are being irresponsible. They are twisting information to make controversial headlines. The underlying indicators for the market remain strong. Most importantly, the wider economy is looking healthy with indicators suggesting an end to the upward trend in unemployment. Inflation is under control and even if there is quarter point rise in the base rates it will still be low and stable by historical standards. So we are left wondering how to reconcile strong market predictions with a seeming decline in confidence about the next six months. There are reasons to be positive. While it would be sensible to plan for an interest rate rise, there are indications this may not be necessary. Inflation has remained subdued despite high energy prices. Financial markets are showing some instability and the sterling exchange rate has appreciated. These factors point towards an increase in the base rate later rather than sooner. The revised CML figures are more realistic and in line with the market’s mood. We should expect the markets to have a steady rather than glorious second half to the year, but we should remain confident.
Affordability was once again in the spotlight last week after Fitch Ratings highlighted the lack of a market standard and the varied ways in which lenders calculate it. The credit rating agency under- took research into the increasingly sophisticated methods that lenders are adopting to assess borrowers’ ability to meet their obligations in the sub-prime […]
Knight Funding is to offer deals from The Mortgage Business exclusively through members of the Professional Mortgage Packagers Alliance.
Some lenders are not making exit fee charges as clear as they could be on mortgage contracts when borrowers take out loans, says the Financial Services Authority.The FSA announced in September 2005 that it was looking into the issue of recent increases to mortgage exit administration fees as some people had argued that these increases […]
Forging links with introducers is a good way for brokers to generate business but developing existing client databases is likely to be more cost-efficient, says Richard Coulson
Nearly 12 months since sweeping to power, prime minister Narendra Modi has overseen a significant turnaround in India, which is now on track to become one of the most pro-growth, pro-investment economies in Asia. While the market has rallied 48 per cent over the last year in response to Modi’s reform agenda, what is the potential for further progress?
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