And this year, I think that how successful we are as brokers will be, in large part in our own hands – how much we can defeat the headwinds and take advantage of the tailwinds.
So, what of these headwinds? Well first, and much talked about, is the apparent slowdown in the prime property market, particularly in London, over the back end of the year. Yes, this is affecting some firms, but much of the purchase activity driven by this market was cash anyway, so in relative terms, the mortgage element is less affected.
In addition, there is lots of the UK outside of London, where survey after survey show house prices still rising. So, a general house price rise, of say 5% to 8% this year will give us some considerable “drift” upwards in our mortgage volumes.
Next is what I view as the myth of “election uncertainty”. I really can’t see much of the mortgage market really affected by the outcome of the election, one way or another. The broad trend of the economy, and hence people’s views about employment will move forward whatever the outcome, and I don’t believe real people would put off a decision about moving home or rearranging their mortgage finance based on this result. Yes, there may be some people put off at the very top of the market in the 0.5% of properties which would be caught by a Mansion Tax, but they will often either be well able to afford the tax or be cash purchasers anyway.
Real uncertainty would come if there was the serious prospect of a referendum on EU membership – the experience last year of the devolution vote showed that – but I for one view that as highly unlikely to happen.
But the tailwinds more than make up for this.
Firstly the upward “drift” of house prices helps all of us toward our targets, but specifically in the estate agency market the stamp duty changes will provide an uplift. And for brokers who work in estate agency I hope they are looking through their list of potential customers for people who were not quite ready to purchase, but whose plans should now have been brought forward by the tax changes.
Next is the continued stream of new lenders to the market. This year will see a number of smaller lenders launch – with lending appetites of say £500m plus in their first year, but also at least one much larger lender with an appetite running into the billions. That has got to provide a boost to the market.
The general market move upwards in procuration fees should help too – allowing firms to invest in new infrastructure and administration support to improve adviser productivity.
And finally – what a brilliantly competitive market we have at the moment – some unheard of rates at ten, five and two year fixed. These products should make even the most apathetic customer sitting on an uncompetitive SVR have a look at what they could save each month This really should be a boom time for remortgage business.
Tails beats heads this year I think.
Stephen Smith, director of mortgage club and housing at Legal & General network