Paul Winter

Ipswich Building Society

The recent reduction in the Bank base rate is likely to restore some measure of confidence to the housing market and there is the welcome prospect of another cut before the end of the year.

This should add further strength to lending growth at the Ipswich, which is significantly ahead of what I would have expected given the present condition of the housing market and consumer confidence.

Our range of core products in prime, buy to let and shared ownership has had a really good response from the market so far this year. Borrowers are increasingly looking for straightforward and honest products with no smoke-and-mirror devices that represent really good value. Lenders that provide the market with such products will do well during the remainder of the year.

Those lenders that have less attractive products and perhaps those that derive a lot of their income from the adverse sector are less likely to do well. With consumer debt at an all-time high and the housing market almost static, I have the impression demand for non-conforming products will not be as great as it has been.

Ray Boulger

John Charcol

Although the Bank of England is keen to dampen speculation of further base rate cuts it is rare when a new trend is established for there to be only one rate change. It will take more cuts to adequately restore confidence and I expect one more 0.25% reduction later this year, leaving base rate at 4.25% at the year-end.

This month’s cut will, however, improve consumer confidence and we are likely to see more astute potential buyers, especially first-time buyers, who have been holding off until now, reassessing that strategy and stimulating the first shoots of recovery in the housing market. The pendulum will swing from a buyers’ market to, by early next year, a seller’s market – albeit with only relatively modest price increases.

On a national basis house prices have been flat for most of this year, although there have been significant regional variations. Mortgage lending will continue to improve and I agree with the Council of Mortgage Lenders’ revised forecasts for 2005 of £265bn gross lending and £80bn net. However, I am more bullish than most on house prices and expect a 3% to 4% increase on the year.

Harry McGeough

Dunfermline Building Society

The market towards the end of 2005 should remain buoyant. The cost of borrowing has never been lower for the consumer and with further downward rate movements predicted the scene is set for a strong period of borrowing.

As most lenders continue to make up ground on the slow start to the year this should result in the product offerings in the market remaining very keen, while the diversification into other lending markets by traditional lenders is a strong indicator of the need to sustain margin and profit. Traditional lenders offering near prime products using their own brand will be more evident in the market towards the year-end.

There are of course continued challenges facing both lenders and intermediaries as regulation impacts on the way we do business. Despite this, the intermediary market remains a strong distribution channel for most lenders given the diversity of products available to the borrower. The restructuring of lenders’ intermediary functions has already been evident this year and we may see more of this strategic alignment before the end of the year.

All of this activity should allow lenders and intermediaries to finish the year on a high, with stronger pipelines going into 2006 than those experienced this year.

Tony Hughes

Pavillion

The recent quarter of a percent cut in the base rate, along with the expectations of a further reduction in the near future means good news for those operating in the near prime and medium adverse mortgage markets.

Those who will benefit the most in the coming months will be the firms that have invested in information technology and the ongoing training and development of their staff. Such firms will find themselves in a strong position to take advantage of what I believe will be an upturn in the market in the last quarter of the year.

The interest rate cut may result in some much needed first-time buyer activity within the market again. In addition to this the change in regulation to permit property investment to be included within self-invested personal pensions may help the buy-to-let market. At Pavillion we take a positive position on the outlook for the rest of 2005 – especially with regards to the sector of the mortgage industry pertaining to our business.

Carl Wright

Cartel

The drop in interest rates has come at a time when industry commentators expected the Monetary Policy Committee to drop rates. At Cartel, we expect further cuts before the end of the year provided conditions allow for this and I firmly believe this will be welcome news both for households across the UK and for the mortgage market.

Despite June showing a 5% increase in the number of mortgage loans approved month-on-month from May, this figure is still 17% lower than in June 2004. The recent cut, however, should give a much needed boost to the mortgage market. Recent statistics also indicate that house prices rose 0.8% from May to June, although annual UK house price inflation has now slowed to 5%.

Figures suggest that earnings growth is expected to outpace growth in house prices in 2005, which is welcome news for the mortgage market and will further boost confidence. With the investment market also having shown signs of stagnation, this interest rate cut will provide investors with the necessary confidence to continue focusing on the buy-to-let market in the UK.