Giving their opinion in this week’s Market Watch are:
Melanie Bien, director of Private Finance
John Heron, chairman of the Intermediary Mortgage Lenders Association (IMLA)
Sally Laker, managing director of Mortgage Intelligence Holdings
Melanie Bien, director of Private Finance
While the June increase in mortgage lending appears to be good news for brokers, there are concerns that this is a blip rather than the beginning of a sustained recovery.
Lending volumes are still extremely low historically and much of June’s uplift is down to the recovery in the buy-to-let sector, rather than first-time buyers returning en masse.
However, does it matter to intermediaries where the business is coming from as long as there is more of it?
In some ways, no, because buy-to-let lenders have traditionally relied heavily on brokers and this doesn’t seem to have changed since the downturn.
The problem is that the buy-to-let resurgence is still in its infancy and brokers need to rely on more than this to pay the bills.
The slashing of residential fixed rates on the back of weak economic growth and the likelihood that interest rates won’t rise until well into next year is encouraging, however.
It is creating a buzz in the media and among clients who may have been sitting on SVRs, but increasingly realise that there are some fantastic deals out there which are worth securing.
Some lenders are going further.
The sequence of seven-day sales that Abbey for Intermediaries has been offering exclusively through brokers has been welcome, with some cracking rates on offer.
Yet, Santander announced this week that its gross mortgage lending in the UK was down 21% in the first six months of this year compared with the same period last year, underlining why it is offering these deals and illustrating the continued weakness of the mortgage sector.
It looks as if sustained recovery is still some way off.
John Heron, chairman of IMLA
We have to be cautious about getting carried away with ourselves with these figures.
Lending was up in June, but from a very low base historically and we have no information to hand that tells us what products were successful from which lenders or indeed whether this was driven by direct or intermediary sales.
Talking to brokers and lenders around the market, however, it does seem to be the case that many in the industry experienced much stronger application volumes in April and May and this has resulted in strong completion flows in June.
However, the second half of July does not necessarily allow us a great perspective on how sustainable this improvement might be as the market takes a natural breather over July and August and only really picks up again by mid-September.
There is certainly greater competition around in both the mainstream and buy-to-let markets; product numbers and active lenders are both materially up.
This improves the case for advice and we are seeing some expansion in criteria and greater innovation.
Yet, we are still dealing with very fragile markets and the latest contortions of the euro will have done nothing to reassure people.
Would-be home buyers are understandably nervous about house prices and their own financial future which is why so many of them are choosing to rent.
Therefore, whilst it is great to see a much busier June, we will want to see a few more consistently good months before we can be confident that activity levels are picking up on a sustainable basis.
Sally Laker, managing director of Mortgage Intelligence Holdings
With the likelihood of an imminent interest rate rise looking increasingly unlikely, lenders have psyched themselves into action and introduced some cracking deals over the last few weeks, which has had a positive effect and stimulated the market.
The million dollar question is will this turnaround last or is it just a flash in the pan doomed to failure?
I would love to say that this is the first sign of an upward trend, but I don’t want to be overly optimistic.
Instead, I would rather assume that this is an indication of a conservative improvement rather than a full blown recovery. I haven’t seen the signs of a step change in the market yet.
The economic outlook and employment still look uncertain and first-time buyers continue to struggle to get a foot on the ladder.
Buy to let is flourishing as a result, as more and more people decide to sit back and wait to see what happens to house prices over the medium term.
With regard to the intermediary market specifically, the role of the broker has never been more important as people turn to trusted experts for product advice and reassurance.
Brokers should position themselves as mortgage experts in the local press and on radio to ensure that they are the first port of call for those needing a helping hand.
I hope that the rise in gross mortgage lending in June can at least be maintained through the holiday period ready for a continued surge in the autumn.
While a sustained recovery looks unlikely right now, I’m optimistic of an upturn as people get used to living life with the current uncertainties hanging over their heads.
