In 2002, the housing market was, despite the statistics departments of the Halifax and Nationwide, all over the place and growth was very much dependent on where you live.
Over the year, according to certain sections of the press, the housing market was, in general, on the verge of a collapse for the whole year. But in 2003, we now have the lowest mortgage rates ever ‘ having gone from predictions of definite base rate rises by the end of 2002 and are wondering whether we will have a rate rise at all by the end of 2003.
The industry is heading for full regulation and most mortgage brokers should now be fully qualified. But what does this mean for brokers in 2003?
Uncertainty is the answer. Uncertainty in the housing market, uncertainty in interest rates and uncertainty in mortgage rates. And especially uncertainty within an industry that is going to contract as the smaller non-specialist brokers and the IFAs that just dabble in mortgages decide that it is all too much trouble.
This is not necessarily bad news. From a broker’s point of view, uncertainty is good news. We do not want a bust cycle in the housing market, but there is a lot of anecdotal evidence that many purchasers are waiting for the market to drop.
If prices drop, a lot of potential purchasers and first-time buyers will come to the market. Uncertainty over the future direction of rates is also good news for brokers. The last thing brokers need is a stable interest rate environment. We need rates to be moving up and down, creating uncertainty so that people act, particularly in the re-mortgage market. In fact the best thing that could happen during this first quarter is a little nudge upwards in the base rate. Again, this could actually bring people to the mortgage market who would otherwise have held off making a decision.
As for the contraction of the mortgage broking industry, qualification and regulation will inevitably reduce the number of advisers and brok- ing firms. While some see the mortgage advice industry dis- appearing almost in its en- tirety, I believe the industry will only become difficult for smaller and non-specialist firms to continue to trade profitably. Domination by the larger firms and networks will become a fact of life.
This year, with all its uncertainties for mortgage brokers, will offer great business opportunities. They may prove hard- er to locate and they may to be different from those of 2002, but they will still be there.
Simon Dice, director of Savills Private Finance