Last year Private Finance director Shaun Church was brave enough to put his neck on the line, and did rather well.
Where interest rates were concerned Church doubted there would be any move, but certainly not a cut. His prediction that Bank of England governor Mark Carney would tolerate calls for a rise throughout the year fell just two months short.
He also got some other figures pretty well spot on: “I imagine we will see inflation edge up during the second half of the year and it could finish 2017 at around 3% to 4%. House prices will show modest increases of around 5%,” he added.
He believes 2018 is set to be a good year with more lenders coming to the forefront, and systems seeing improvements across the board, making broker submissions more streamlined and better packaged.
“I would expect to see improvements on service levels from lenders as the quality of packaging will be improved and so too will the timescales to upload documents,” he said.
However, he also issued a warning to brokers not to let their service levels slip.
“The biggest challenges for brokers will remain the evolving robo-advice, which will see advancements again next year, and retention strategies from lenders becoming more aggressive,” he continued.
“Brokers need to ensure they are on top of their clients and offer a better service than they have ever done as lenders target clients earlier.”
One of the biggest trends sweeping through the intermediary mortgage market is the increased desire of lenders to retain their customers by performing product transfers.
With most lenders now paying retention proc fees to brokers there is an added incentive for them to retain borrowers without involving brokers.
Product transfer data
“There needs to be a way to include product transfers in the way we look at the market, as fixating on gross lending is not painting a clear picture. Seeing the full split would give us a much better judgement of mortgage activity levels which would benefit the industry as a whole,” he said.
And his predictions for the coming year focus on this part of the market.
“I expect that 2018 will see higher activity levels than 2017, but the key areas of growth will be focused around remortgages and product transfers,” he continued.
“There’s around £300bn of maturities in the market next year, and this is of course fuelled by higher gross lending (and product transfers) in previous years, particularly in 2016. Brokers will be able to make the most out of this exciting time primarily by looking after their customers and making sure there are good client contact programmes in place to talk to their clients reaching the end of fixed-rate deals.
“There are reasons why product transfers are good solutions as they typically have no physical valuation requirement, can be completed quicker than a remortgage, can often be set up early with the ERC waived – all of which creates early certainty for clients.”
As far as other elements within the market are concerned, Jones suggested there may be a continued slowdown in purchase activity in some regions, but that the stamp duty cuts should help first-time buyers.
“Hopefully this will encourage second- and third-time buyers to buy and sell too and build flow in the market,” he added.
Calm for buy-to-let
In contrast to relative stability in the residential sector, it has been yet another year of change for the buy-to-let market, in which lenders, brokers and landlords have needed to get to grips with regulatory and tax driven changes.
BM Solutions head Phil Rickards (left) noted that it would be great to have some stability and consolidation in 2018 for those changes to continue to bed in.
“Lenders will be working hard in 2018 to enhance and improve their own propositions,” he said.
“Those who have launched manual processes to help cope with the portfolio underwriting changes will be looking to innovate in order to be able to continue writing good quality business effectively.”
Rickards too believes 2018 will bring a flood of remortgage business for intermediaries.
“It’s widely anticipated that 2018 will be a year that continues to drive remortgage business – particularly given that the year kicks off with the second anniversary of the rush to beat the stamp duty changes,” he continued.
“We’re still seeing product transfers grow in popularity and with the decline in buy-to-let purchase activity set to continue as landlords come to terms with the new world, product transfers can offer landlords the chance to stay with their existing lender without the need to meet the new criteria.”