Name: Peter O’Donovan
Company: Bestinvest
The figures from the Council of Mortgage Lenders provide yet another encouraging indicator of an improving mortgage market.
I can understand why people may feel that the market has turned the corner, having read the property figures from the Halifax, the Nationwide and the Land Registry Index. However, I would remain cautious, as we have a long way to go.
The 23% increase in the number of mortgages is admittedly huge, but despite the best figures since July 2008, they are still 6% down on the previous year. The data probably show that we have come through the worst period and the market may now stabilise.
Other figures show an increase in first-time buyer loans, but the size of deposit required has increased from an average of 13% to 25%.
A return to normal market conditions will be reliant on an increase in lending to the higher LTVs above 80%. This has started to happen, with Woolwich and Abbey relaxing their requirement of a 40% to a 30% deposit for the best rates.
The wholesale market appears to be improving which is suggested by LIBOR coming down making more money available between lenders. I think we can be cautiously optimistic that we have got through the worst.
There are a few more factors to consider, unemployment for example, before we can be certain that we are returning to normality. If the lending continues to grow and house prices continue to creep up, it augurs well for the rest of the year.
Name: Jonathan Cornell
Company: First Action Finance
While it is great to see a number of positive reports showing that things have stopped getting worse and are starting to improve we need to take into account they are improving from a very low baseline.
I think we are probably several years away from seeing normal levels of activity, and even then these would be a very different ‘normal’ from the start of 2007.
However, even a return to the 2005 levels of business would be very welcome, in view of where the market has fallen.
A number of house price indices have indicated consistent rises over the past few months. However, most agents have been frustrated at the low stock levels coming onto the market. There is a danger that if the supply of property coming onto the market increases sharply, this may have a negative impact on prices.
Considering the chronic lack of competition, and with lenders increasing rates and criteria to reduce the number of applications they receive, I do not think that we will see much more than a very slow steady improvement until we see an increase in the supply of funding. Unemployment will continue to increase and this will have a negative effect on consumer confidence.
I think that house prices will be at roughly the same levels at the end of the year. If the number of mortgages stayed at the levels seen in June for the rest of the year, I would be delighted. However, I think it will be a hard struggle for brokers well into 2010 before we see a significant turnaround.
Name: Alan Lakey
Company: Highclere Financial Services
I have noticed a distinct increase in enquiries, particularly from first time buyers.
It seems as if the initial shock of the economic downturn has been deflected and people, like those citizens during the blitz, have acclimatised themselves to the fears and dire warnings that have resonated over the past eighteen months.
With property values appearing to have levelled out logic would dictate that it is now the correct time to buy at the right price and also to take advantage of historically low rates, before they rise again.
Equally, the anticipated interest rate hikes may well create serious pressure on property prices which could cause another, albeit temporary, fall.
However, the real problems relate to those existing borrowers who cannot consider moving or even remortgaging due to the substantial erosion of their equity.
Similarly, over the past eighteen months there has been an unprecedented exodus of lenders who have been concentrated mainly in the self-cert and adverse sectors.
As a result, many borrowers will be forced to remain with their current lender, and a number of these people will have no option but to remain on the base rate.
In the same way, there is a lot of potential grief for those borrowers with LIBOR linked loans.
I believe the sum of this potential negativity may cause a further period of instability where borrowers are either unable to or are afraid to commit to a purchase.
The probability of this grief occurring in 2009 is very low. But next year…..
