View more on these topics

2007 Will be yet another strong year

The British obsession with house prices continues unabated, with most newspapers coming up with predictions for the coming year.

The doom merchants are filling column inches with forecasts that would have us all believe that this is the year the housing market will grind to a halt, that first-time buyers are being squeezed out by greedy buy-to-let investors and that interest rates will climb steeply.

Of course they might be right, but it has been a long time since any such disasters hit our market. So let’s take a look at the facts.

The buy-to-let sector seems to be healthy and demand is strong, fuelled by an influx of immigrants which looks set to continue as long as Labour is in power. The student population is at an all-time high, divorces and separations continue to increase the number of single occupancy dwellings and first-timers are renting for longer.

The adverse market is a dead cert for growth this year. The two interest rate rises in 2006 will put some borrowers under pressure which will increase the number of people who have blemishes on their credit records. Bankruptcies and individual voluntary arrangements were also on the up in 2006, again filtering those borrowers into the adverse market in 2007.

This year will be tough for mainstream lenders as they continue to deal with cutthroat competition. The sub-base rate deals being sold over the past two or three years will be maturing this year and customers will face payment shocks.

Lenders’ retention policies will become more aggressive to try and control the churn. Some brokers will fall for the proc fee approach, not realising that they are making the gross lending market shrink and in the long run could be doing themselves out of jobs.

The new entrants of 2006 are no longer new entrants. They will have to prove that they are bringing something extra to the market to grab enough market share to make a profit. The extra competition they bring to the market will benefit brokers and customers in areas such as product innovation, technological advance and improved service.

The market will in general will have another strong year and will probably end up somewhere between 310bn and 330bn. The big balance sheet lenders will knock at least 10% off this figure as they become more desperate to retain borrowers.

At least three networks will disappear, probably as a result of being bought by bigger players. The intermediary sector will continue to take market share away from lenders’ direct to consumer propositions and the regulator will crack down on brokers and lenders abusing adverse borrowers.


CEBR special report: Danger of early rate hikes

The economic news over Christmas and New Year has pointed to strong activity in the UK and continental Europe, and this may well push their respective central bankers into putting up interest rates soon.The picture from the US has been patchier, although firm consumer spending figures and today’s data showing a 167,000 jump in non-farm […]

Yorkshire to open 15 new branches

The Yorkshire says it plans to open 15 new branches across the UK creating around 100 new jobs.The society says it’s in the throes of deciding on the locations of the new branches, which will be opened on a rolling basis from the summer of this year.It aims to open all the branches within the […]

Gearing up for a competitive year

The end of one year and the beginning of the next is always an interesting time in the mortgage world as lenders’ thoughts turn to hitting the targets in the new year.

Spokesman for Freehold

Terry Pritchard has been appointed spokesman for the Freehold packagers’ association while Paul Brett, who founded the association in 2005, moves on to focus on running new lender FML. Pritchard, whose company Chase UK is a founder member of Freehold, is part of the steering committee formed to provide direction to the association. Brett remains […]


News and expert analysis straight to your inbox

Sign up