In the final edition of a four-part video series in association with Accord Mortgages, Duncombe said the scheme which went back to 2010 had been “washing around for a little bit with lenders being given money to lend to keep the market going”.
He added: “Lenders are very well capitalised now compared to where they were in 2010. The government’s view is that money is no longer required therefore lenders need to pay it back.”
The initiative gave eligible banks and building societies access to cost-effective funding. Some £127bn is due to be repaid by 2025.
Duncombe said: “Some lenders, like ourselves, have paid back the vast majority of it – we’ve only got a small amount left and we’ve been paying it back over the last few months and years.” He added that other lenders will be “starting to getting round to paying that”.
He said this obligation will “potentially affect lenders’ appetite to lend at some point”. He said would it have no impact if a lender had repaid the debt, raised funds or had sufficient capital, but some may “have to take their foot off the gas to allow them to pay some of that money back it may affect their appetite to lend”.
Duncombe said this would be different for every lender and insisted the market was “really well capitalised” but said it was another area for consideration in addition to other factors which could determine lending activity.
Richard Merrett, director of strategic relationships at Simplybiz*, said this could influence lender strategies and questioned whether those that were less competitive with pricing would be “even more aggressive on retention business because they want to keep hold of what they’ve got”.
Guessing the market
Duncombe said brokers should not “assume anything” in the coming year, adding that some potential buyers were waiting for rates to come down but it was “dangerous” to predict what would happen.
“If you’ve seen what’s happened in the last 18 months, anybody who’s tried to guess that market has probably got it wrong,” he added.
Duncombe said advisers should get clients in the “best possible position”, give them information and build their confidence to move forward with a purchase.
For more of the debates in the series, watch the first video in the series on buy to let, part two on first-time buyers and part three on mortgage pricing.
*Note: Since recording Richard Merrett has been appointed MD of Alexander Hall, and will take up this position on 2 January 2024.
