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All eyes on the mortgage market in 2015 – Stonebridge

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  • 05/05/2015
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All eyes on the mortgage market in 2015 – Stonebridge
The impact of the impending general election on the housing market has been overplayed, with 2015 set to be a strong year for mortgage lending, writes Richard Adams, managing director of Stonebridge Group.

Spring has sprung, summer is almost here and this time of year traditionally tends to mark the start of the housing and mortgage market truly kicking off and forging ahead.

There’s really no doubting that 2015 continued where the end of 2014 left off which meant a somewhat flat market with transaction levels relatively subdued and business volumes not what they were in the middle of 2014.

However, it’s my firm belief that the market has turned a corner in March and our own experience and wider industry statistics seem to show this. Certainly for Stonebridge, March 2015 proved to be a watershed month in terms of mortgage completions. We posted our best month ever in terms of both the number of completed mortgage cases, a significant 60% up on February’s number with the value up 62%.

‘Stabilising’ market

Recent gross lending estimates from the Council of Mortgage Lenders (CML) also appear to show March as a turn-around month. Describing the start of the year as ‘sluggish’ for mortgage lending, March’s figure of £16.5bn was 21% higher than in February and, I think quite notably, 7% higher than March 2014 (£15.4bn). Total figures for Q1 this year are an estimated £44.9bn, which represents a slight 3% decrease year-on-year, and 12% down on Q4 2014.

According to CML chief economist, Bob Pannell, the lending market was “stabilising” with both “sentiment and activity…showing early signs of improvement”. The lender trade body cites the introduction of the Stamp Duty reforms as a big influencer on this and the expectation is that lending will strengthen over the next few months.

On all of this it’s hard to disagree. Without doubt, March proved to be a very different month to the previous two and there was a growing demand from borrowers, and a growing willingness to service that demand from lenders. Competition in the mortgage market is keen to say the least, and I suspect that lenders will spend the rest of 2015 going all out to secure their ambitious targets, especially given the relatively slow start to the year.

A year of two halves?

Much has been made about the general election effect on the mortgage and housing market, however my own belief is that this is somewhat overplayed. March’s figures seem to suggest that activity will continue to grow up to and past the election, and let’s not forget that people still need to sell and move and an election will not change this.

A lot of perception from last year is that the introduction of the Mortgage Market Review (MMR) meant 2014 was a ‘year of two halves’ with great swathes of lending up to 26 April and an immediate tailing-off after it. However, this wasn’t the case at all – lending grew through April up until the autumn and the slow-down only truly kicked in as the year was drawing to a close.

To my mind, the ‘year of two halves’ analysis may actually be relevant to 2015, we have started off slowly but I fully expect lending activity and levels to improve and increase certainly over the course of the next six months. The election result – whatever that might be – may have a smaller impact than many are suggesting.

Advisers on the frontline

Whatever the case, mortgage advisers remain in the strongest of positions and the fact that competition among lenders appears to have intensified is a real positive to the intermediary sector and their clients.

More and more consumers are going to be looking at an ever-changing mortgage marketplace and seeking out an adviser to make sense of it for them and to ensure they get the best and most appropriate deal.

Advisers therefore need to continue making sure their services are marketed well and that they are putting themselves in front of as many potential clients as possible. The mortgage market is about to get very interesting.

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