So why is UK lending data telling us lending fell in February by as much as 8%?
Our experts try to square the circle.
This week’s Marketwatch commentators are:
Openwork proposition director Paul Shearman, who suspects lazy advisers may not be educating clients about improved market conditions
Middleton Finance owner Daniel Bailey, who suggests the austere lending figures merely reflect the time lag in completing purchases
BM Solutions head of sales Phil Rickards, who says the fact the mortgage market has remained stable is a positive in itself
Paul Shearman, mortgage, protection and general insurance proposition director at Openwork
“Just to let you know, we have finished the month on 82 mortgages. A record month since Northern Rock collapsed. Not bad for seven advisers.”
This was a direct quote from an email I received last week from one of Openwork’s top Mortgage Enterprises. A number of our other firms are already well up on last year.
However, the CML’s figures do indicate that across the market, business has been slower than anticipated. This seems to fly in the face of the fact that product pricing is lower than most of us can ever remember.
There’s no single reason for the slow run rate, it’s a combination of borrower confidence, borrower apathy and continuing tight lending criteria.
However, just to be slightly controversial, I suspect it’s also partly down to lazy advisers. Admittedly it’s a couple of years ago, but one of the major lenders found over 50% of returning borrowers did so through a different mortgage broker.
Advisers need to ensure that they are keeping close to clients and educating them on the new market conditions. The rates available will mean that many – even those midway through deals – would be better off by transferring to a new product. But if advisers don’t engage them, inertia will prevail.
As ever, it’s the firms managing their client relationships pro-actively that are delivering growth. Achieve this and mortgage brokers should still deliver a good result in 2013.
Daniel Bailey, owner, Middleton Finance
The work that both I and other mortgage brokers are acquiring contradicts the supposed bleak mortgage lending figures.
I am experiencing an increasing number of purchase cases including first-time buyers, buy-to-let purchasers, and home movers. This is the busiest I have been with this type of work in five years.
Equally, I have spoken with solicitors and estate agents who have also noticed an increase in their work activity and are feeling more positive about the mortgage market.
There is indeed a lot more optimism in the mortgage industry but this shouldn’t be surprising. The Funding for Lending scheme has had a positive effect for the mortgage market by producing some incredible rates from lenders who are looking to increase their lending volumes.
It is a strong possibility that the austere mortgage lending figures are merely reflecting the time lag frequently experienced in purchase cases which can take six weeks or more to complete. Patience may be needed to see these positively impact upon mortgage lending figures.
For the past five years, purchaser work has been rare for brokers like myself, but the sudden increase we’re experiencing now is going to be very beneficial for us and the mortgage market.
It has been a number of years since you have seen a mortgage broker smiling – may it long continue.
Phil Rickards, head of sales, BM Solutions
At the end of 2012 there was a lot of optimism in the market for the year ahead. New initiatives designed to boost the market helped drive rates lower and enabled lenders to increase accessibility. But it is important to remember that the mortgage market doesn’t operate in isolation.
Potential growth may be offset by fragile consumer confidence and a whole range of external economic factors. The latest reports indicate the economic situation is set to remain challenging over the coming year and this will be the key determinant of how activity in the UK progresses. Given the uncertain domestic economic climate I’d argue that it could be taken as a positive the mortgage market has remained so stable.
Looking for encouraging signs, by the end of 2012 the number of first-time buyers had reached a five-year high. It is right so many initiatives are focused here, as without growth on the first rung of the housing ladder the market will find it difficult to grow. I’ve also talked a lot recently about an encouraging and steady growth in BTL lending over the last few years and can see no reason why this won’t continue.
We are also seeing evidence of more borrowers speaking to brokers to assess affordability levels. This is a healthy indicator and we expect mortgage activity to start showing modest increases during the rest of the year.