Brokers should brace themselves for a year of falling business due to rising interest rates and high swap rates.
Kensington Group chief executive John Maltby says margins will tighten this year as there is an over-supply of products and advice.
Platform head of marketing Paul Hunt believes that the rising cost of fixed-rate deals could mean that fewer people will remortgage while Hamptons International Mortgages technical director Jonathan Cornell considers that even where good deals are on offer, it will mean lenders are running loss-leaders.
HBOS, the UK’s biggest lender, is planning for gross lending of £330bn this year, down from £346bn in 2006, although that prediction was made before the bank base rate rise to 5.25 per cent earlier this month.
The Council of Mortgage Lenders may review its initial prediction of a £360bn market following the rate rise and dramatic increases in swap rates this month.
Maltby says: “It will be a more challenging year. There is an over-supply of products and an over-supply of advice and therefore the strong lenders and intermediaries will prosper. Margins will be down for everyone so it is a year to be efficient.”
Hunt says: “People’s exp-ectations on fixed rates are lower than what the market can achieve so there may be people dissuaded from taking fixed rates because they will be higher than when they first took out a fixed loan.”
Cornell says: “Fixed rates will always be relatively attractive but some lenders are selling at miles below the cost they are buying in at.
“Still, the difference between a good and bad rate will be the same as if we went back before August.”