The industry did not collapse, the mortgage lending wheels did not grind to a halt and brokers did not have to resort to part-time bar jobs in the evening as some of the doom-mongers predicted.
But what else happened and what were the highs and lows of 2014?
One of the year’s quite literal highs came from Austrian daredevil Felix Baumgartner who skydived from 128,100 ft from the edge of space here, captured on mindbending video. And one of the many lows? How about ex-Tory minister David Mellor’s condescending rant at a London cabbie who unsurprisingly resented being called ‘sweaty’.
But meanwhile, in the mortgage world, our experts reflect on the year’s highs and lows.
Pat Bunton, director, London & Country Mortgages and chairman of the Association of Mortgage Intermediaries, looks at the impact of HSBC’s broker courtship and the unintended consequences of the MMR.
Sue Anderson of the Council of Mortgage Lenders looks at the handling of interest-only borrowers and the treatment of lenders ‘legitimate’ caution over future conduct risk come-backs.
Sally Laker, managing director of Mortgage Intelligence and Mortgage Next, reflects on proc fees and the struggling remortgage market.
Pat Bunton is director, London & Country Mortgages and chairman of Association of Mortgage Intermediaries
So 2014 has been a relentless year for the mortgage industry, but it has been a very positive year indeed.
Market volume is going to come in at £205-£209bn, a marked improvement from last year’s £176bn and up from £145bn in 2013. This second year of decent growth has seen intermediaries’ share rise and that is cheery news indeed.
We have seen a range of lenders open up to the intermediary space, underscoring the importance of this sector moving forwards. The likes of HSBC are even signalling a change of heart with their Countrywide pilot as their newly discovered appetite to engage with intermediaries advances further and they retreat from the direct-only model.
MMR has been implemented and in the main this has landed smoothly. The final rules did not go as far as some of the earlier consultation papers signposted and in late additions like transitional provisions we saw the regulator acting with common sense to protect vulnerable consumers
Sadly we have also seen areas where implementation of MMR for some consumers has fallen well short of regulatory intent. Some have half-heartedly applied (if at all) the transitional provision and we are seeing some horrible things going on in the areas of interest only, lending into retirement and portability in particular.
Let’s hope that 2015 is the year when all market participants place their customers’ interests first and wouldn’t it be nice if this was done voluntarily, not after a whack from a regulatory stick.
Sue Anderson, head of member and external relations, Council of Mortgage Lenders
I reckon there’s broad consensus on some of the highs for the industry this year.
MMR implementation must surely go down in the annals of mortgage history as a major success story. No-one shut up shop because they weren’t ready; lending volumes wobbled rather than dived; people successfully carried on buying, selling, and moving home throughout the period. Big tick.
Equally impressive was the industry’s success in meeting the 2020 interest only commitment.
Lenders made great efforts to contact their interest-only borrowers to try to ensure they have plans about how to manage the journey towards the end of their interest only mortgage smoothly.
There might be less consensus on the lows. My personal pick would be the dismissiveness with which lenders’ legitimate caution has been received. Whatever soothing words today’s FCA may give, lenders see conduct risk and uncertainty on how tomorrow’s regulator may view today’s lending.
And this year’s wild card? The pensions minister’s intervention on the treatment of pension contributions under the affordability assessment. Inadvertently, the minister has single-handedly exposed the government’s “have-cake-and-eat-it” approach to lending policy. On the one hand we have nanny-knows-best, saying “don’t lend to people unless they demonstrably have enough spare income to afford it”.
On the other we have treat-people-as-grown-ups , saying “lend to people on the assumption that they have the sense to reprioritise their spending if they need to.”
Next year, I hope one of the highs will be resolution – or at least recalibration – of these glitches.
Sally Laker is managing director of Mortgage Intelligence and Mortgage Next
The highs include the benefit of various government schemes and availability of attractive 90% LTV mortgages that brought life back into to the industry, with a considerable peak in business levels in July and October. Intermediaries have been working around the clock to get applications processed, to meet increased demand, but also to cope with the impact of MMR as the different criteria changes were bedded down.
The lenders are close to utopia in terms of the upfront information now provided by intermediaries. Realising their growing importance for business levels and also their upfront work, a number of lenders have recognised this with an increase in procuration fees, a welcome high for 2014!
The distinct lack of a strong remortgage market in September, despite everyone’s best efforts to create one, was a disappointing low and surprising as many customers could still benefit from doing so.
One of the stumbling blocks for existing customers that want to move or remortgage is not meeting the lender’s new affordability calculation, which could result in them becoming what is now referred to as ‘mortgage prisoners’. Also, some good borrowers who meet both the criteria and affordability can get caught where the LTI cap is imposed and can no longer buy. In my opinion they are the results of unintended consequences, which is a low for 2014.
Overall, 2014 has been a really positive year for the industry. There is a feeling of recovery and a real need for intermediaries from both the consumer and the lenders.