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Lenders need to make 2012 a year of action

Buyer demand is on the up in 2012, but do lenders have an appetite to meet the needs of these newly-confident house hunters? The flurry of first-time buyers rushing to complete before the end of the Stamp Duty holiday has played a key role in buoying up the market since the start of the year, but this should not be overstated.

Activity across all sections of the housing market has increased in 2012, whether buying for the first time, moving home or buy-to-let.

The recent repricing of higher LTV deals and changes to interest-only products, along with a general contraction in credit terms by some lenders, raises questions about whether we as an industry are doing enough to maintain and extend buyer confidence.

This year could herald a significant stepping stone towards market recovery but only if we respond to what is happening at the grass roots of the market and take a positive stance towards incentives such as the NewBuy Guarantee scheme.

Housing market sentiment
Getting a true picture of today’s housing market can be a challenge. With so many, often conflicting, reports and commentary on the housing market, mortgage advisers could be forgiven for any confusion when it comes to house prices, buyer activity and which areas of the market are providing the greatest opportunity.

For real-time information on the housing market and buyer confidence levels, estate agency data is key. Since the start of 2012 our sales figures have shown a trend for less speculative, more decisive buying patterns.

Maintaining confidence is key to motivate buyers and encourage home movers to put their homes up for sale

Although the number of buyers registering an interest with our estate agency branches and the number of sales has remained fairly consistent when comparing Q1 2012 to the same period last year, sales of second-hand and new-build homes has jumped almost 10%. It shows that many buyers are now getting off the fence and taking decisive action.

Equally, our mortgage sales have taken a 34% leap in Q1 2012 when compared to the previous year. These property and mortgage sale increases paint a clear picture of current buyer sentiment.

If confidence, however fragile, is returning to the housing market and buyers are taking action rather than waiting for the right time to make their move, it’s in everyone’s interests to maintain that confidence and find ways to encourage activity and growth across the market.

New homes
Despite recent figures showing a fall in construction output, we have recorded increases in both the number of new-build homes available to buyers through our branches and the number of new homes purchases which rose by 26% in Q1 compared with Q4 2011.

The interest and demand for new homes, often fuelled by the quality of the homes available and incentives offered to buyers, is undisputable. It provides a good reason why schemes like NewBuy should be welcomed, even if they are not the answer for all buyers looking to move home in the current market.

With this demand in mind, new-build and schemes like NewBuy are set to become increasingly important to brokers this year. Although, as many pundits have reiterated, it is unlikely to provide the definitive answer to a housing market recovery, anything that helps buyers should be viewed positively.

But again we must return to the question of how committed lenders actually are to supporting buyers wishing to take advantage of NewBuy and maintaining the early momentum in the new-build market through the year.

Limiting the channels for NewBuy products is unnecessary if lenders work with brokers who adopt robust and tightly controlled distribution practices and have a proven record of good service. These providers have a key role to play if NewBuy is going to make an impact on the market and fulfil its potential.

First-time buyers
Whether we continue to see high numbers of first-time buyers in the market after the end of the Stamp Duty holiday remains to be seen. We certainly saw no reduction in the number of would-be buyers looking for mortgages in March despite the fall in some higher LTV and interest-only products.

There are still opportunities for new buyers to get on the property ladder and mortgage advisers can be instrumental in encouraging them to discuss the options for buying a first home. The last thing anyone needs at the current time is for confidence to ebb away at the bottom of the market.

There was a much-needed boost in the period leading to the end of the Stamp Duty exemption, but the benefits of not paying the tax on a typical first-time buyer property should not be exaggerated. There is still plenty of opportunity for these buyers if they are looking to purchase a home this year.

The year ahead
Maintaining confidence in the market in 2012 is key, both to motivate buyers but also encourage home movers to fuel activity by putting their properties on the market.

Underlying concern about lenders’ appetite to lend as well as the impact of credit changes which mortgage advisers have seen over the past three months could have a negative impact on the demand seen so far this year.

Let’s hope changes across the industry do not dampen the spirits of home buyers or mortgage advisers as we go through 2012.

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