Name: Jonathan Cornell
Company: First Action Finance
Sadly, I think that the BSA will be proved right. Anyone who expects 2010 to be much better than 2009 is going to be very disappointed. The key issue is the lack of funding available to the lenders.
This year, the situation looks very like it did at the end of last year. However the
good news is that it will not get any worse. The major lenders know exactly how
much they have to lend in 2010 and it is unlikely that they are going to want
to significantly increase their current market share.
These lenders will all be very busy getting to grips with any regulatory changes from the FSA which make it through the Mortgage Market Review. There is a queue of new lenders waiting to enter the market, keen to exploit the lack of competition which is blighting
the industry, but the FSA is very cautious on approving them. It does not want to
allow large numbers of non-bank lenders to enter the market for a short period and
then exit when competition increases.
The regulator wants to ensure that any new entrants will be in the market
for the long term and are truly committed to treating customers fairly. There will be
a handful of new lenders this year, but between them, they will not increase the
volume of gross lending significantly.
The best we can hope for is that these lenders all choose to distribute through
brokers rather than the direct channel. I think that gross lending will increase by
about £5bn to £10bn, although this is small, it is a very welcome increase.
Name: Alan Margolis
Company: Cheval
I think one can reasonably assume that from a lending activity perspective,
2010 will be no worse than 2009 and that approvals and lending are likely to
increase. With the much discussed macro factors affecting the economy, I expect
the increase will be gradual and certainly nothing dramatic.
The expected increase in mainstream lending will affect short-term lenders in a
couple of ways. Firstly, any increase is likely to be mirrored in the short-term bridging
sector because short-term lenders rely on BSA members to provide much of the ‘take
outs’ or exits for customers.
The more confident that short-term lenders become about the availability of mainstream products to ‘take out’ their borrowers and the willingness of BSA members to lend, the more loans they are likely to complete.
Secondly, as general lending activity increases throughout 2010, we can expect
a corresponding increase in residential property transactions – the two are
naturally interdependent.
The short-term sector is no different to the rest of the mortgage lending industry
in that the greater the rise in property activity, the greater the overall demand for
short-term loans.
I am confident that the specialist short-term lenders who have survived the
very difficult years of 2008 and 2009 will be well placed to take advantage of the
increased lending and property activity expected in 2010. The sector is poised for
growth – albeit nothing like what we saw in the run up to the credit crunch.
Name: Brian Murphy
Company: Mortgage Advice Bureau
I believe that activity is likely to remain constrained during 2010,
despite a slight recovery in the house purchase sector in the last six months of
2009 from the lows of this time last year.
Capital adequacy requirements, funding constraints particularly within the building
society sector and a lack of real choice and competition among the mainstream will all
be factors.
Any new entrants to the market are likely to be aiming for specific market sectors or segments of business and therefore additions are unlikely to challenge the top five or six mainstream market players and significantly increase overall volumes.
With expectations that many banking groups in both the UK and overseas will
announce significant further write downs and losses, this will impact on the appetite
and ability of lenders to increase funding levels.
Due to the current economic uncertainty, many borrowers will be concerned
about their ability to take on new or increased debt and this will have a restraining
factor on mortgage levels. Although the remortgage market has contracted significantly, it does appear to have stabilised in recent months.
There has been a small increase in property prices which has alleviated LTV issues for some
borrowers. With some very competitive remortgage products being offered and the forecast
by some commentators that interest rates may rise later in 2010, I believe that more
borrowers will start to reconsider their remortgage options.
