Mehrdad Yousefi, head of intermediary mortgages at Alliance & Leicester has offered his predictions for the mortgage industry in 2005.
He says: “The intermediary market has enjoyed buoyant trading conditions throughout 2004 and has played a significant role for most lenders in driving business volumes.
“The vast majority of intermediaries have increased their business volumes throughout 2004 against a backdrop of a strong housing market especially in the first half when the combined volume of house purchase and remortgage activity was at its highest.
“Mortgage regulation has been a mini-revolution in the marketplace and in the early days of November, the vast majority of intermediaries and lenders witnessed a significant drop in business volumes. Business volumes have since bounced back.
“As we look forward to the New Year, we anticipate that despite a slower housing market in 2005, the intermediary market will again play a significant role in providing the necessary business volumes and relevant market shares of most major mortgage lenders in the U.K.
“There will undoubtedly be ongoing debates about the length and content of KFIs and the additional time it takes intermediaries to provide information and advice to customers before writing a mortgage case with a lender.
“I fully welcome the FSA’s recent decision to conduct a review of KFIs.
“The standardisation of KFI documents is absolutely central to providing clarity to mortgage intermediaries and consumers alike.”
He adds: “We don’t predict any major change to interest rates next year, unless there is a major change in the world economy or domestic retail spending.
“The fundamentals underpinning the housing market remain extremely positive and as such, we forecast that house prices will remain broadly stable. Interest rates remain at far lower levels than in the past and unemployment also remains extremely low.
“However, house prices are influenced by consumer confidence and if the continued speculation and “talking down” of the market continues then this will inevitably have an impact on the market and an adjustment in prices may occur.”
“The general environment for home ownership will remain attractive, bank base rates will stay at historically low values, we forecast continued low unemployment, and inflation which appears to be well controlled.
“Most of 2004 was a sellers market, we predict that next year will be far more balanced and that purchasers will be able to be more selective in choosing their next home.
“We predict that the remortgage market will remain buoyant as consumers will still have access to great deals.
“However, I would recommend that all customers ask their existing lender if they can have the same deal as a new customer before they look to remortgage.
“Unlike many lenders, Alliance & Leicester allows all of our existing customers access to the best deals, they should check to see if their lender does the same.”