There seems to be some general consensus that the outlook for this year is pretty flat against last year, with most commentators suggesting gross lending of around £135bn.
Much of it is driven by some of the big lending outfits, including Lloyds and Abbey, confirming they will be looking to lend roughly what they did last year.
However, it is very encouraging to hear firms such as Platform and Accord looking to increase lending and others, such as Coventry, continuing to push up the ranks in terms of their market share.
What are the opportunities? There are two obvious ones that top the charts – buy to let and remortgaging. At Personal Touch, at the top of the market, about 18 per cent of our business was buy to let and it was interesting that in December it was 18 per cent again.
Is it just because Nationwide’s TMW and BM Solutions have jointly saved the buy-to-let market from a demise?
The simple answer to that from a lending perspective is yes. If they had not taken the volumes they did, the smaller players would have withdrawn from the market or made LTVs and criteria so tight so as not to be flooded that it would have little impact.
There are concerns that lending policy and regulatory burden has socially engineered the occupancy status of individuals but I think we may have moved beyond that, which may make the buy-to-let market more sustainable.
We already know there are lenders, including Paragon and Precise, which have been welcome additions to the market. We know firms such as Platform will be looking to be a bigger player in buy to let and we also know lenders such as Abbey are likely to move into this area. All this, driven by the reality that lenders see solid margin on buy to let and landlords see an increase in rental yields, makes it a sustainable business opportunity and one you should be ready for.
I am encouraged by the other option of remortgaging but I am less sure of it because it is about timing. We saw an uplift in remortgage activity at the end of 2010, driven initially by Woolwich and its Great Escape campaign but supported by Coventry with some excellent rates and followed by some of the bigger boys.
However, we are already seeing fixedproduct prices increase as a result of swap increases so the gap between fixed rates and SVRs is widening again.
Despite some suggesting otherwise, the earliest I can see a base rate increase is the fourth quarter and I think it will only be 0.25 per cent, as I do not think the spending cuts and unemployment has started biting yet. This is where, as intermediaries, you are in the driving seat, as your clients will be relying on you to advise them and keep them in touch with market, product and rate changes so they can remortgage before the rates start to rise significantly. Advice I think is where the real opportunity is.
Dev Malle is sales and marketing director at Personal Touch Financial Services