Do you think the recent mergers of Portman and Staffordshire building societies and the smaller Clay Cross and Derbyshire will spark off a flurry of consolidation for building societies?
Webster: I think the news of these transactions means that some societies will need to answer questions that they will already have been asking of themselves.
Specifically, this is to decide whether they are best able to cope with everything that the mortgage market is about to throw at them alone or in tandem with someone else. If the latter, then it is to decide who would make the best partner. Preferably, they should come to that decision before a potential partner merges with someone else.
Sturges: The more ambitious societies will look to position themselves to take best advantage of a mortgage market that is set to continue to offer great opportunities for businesses able to adapt to changing consumer demands.
Also, it is becoming harder for smaller businesses to survive in a highly competitive market where price, service, the sensible use of technology and product innovation and design help win market share. Quite simply, bigger businesses are best positioned to deliver on all four.
These, coupled with the onset of statutory regulation of the mortgage advice sector and the inevitable consolidation among intermediaries – an important source of business for many societies – means that further consolidation is not only inevitable but also desirable for many of the remaining societies.
Having said that, I have no doubt that a number of smaller societies will survive and prosper in their current form because of their ability to appeal to a local but loyal community.
Hornsby: Yes there will be further consolidation and no doubt there are talks in existence at present. Forthcoming regulation plays into the hands of the bigger lenders and smaller societies need to act to ensure they at least maintain their market share. I think any activity will come from the mid-table players and in particular those with grander plans for the future.
Do you think the number of lenders offering Islamic mortgages is set to increase after HSBC became the first high-street lender to launch a Muslim mortgage earlier this month?
Webster: Yes I believe that more lenders will enter into this market. There are a large number of Muslims in this country and, given the choice, I think most would want to opt for a Muslim mortgage if they could. Other lenders are implying that they may enter the market and West Bromwich Building Society has already announced it will do so at some point. Like any niche, careful preparation and testing prior to launch would be advisable.
Sturges: Almost inevitably. This clearly represents a new niche market and one that many lenders will be keen to tap into. As such, I would imagine that many will be watching the progress of HSBC's initiative with great interest.
As a specialist lender, igroup will be among these and while we have no plans at present to introduce such a product, its long-term appeal and success from our point of view will be dictated by the ability of intermediaries – our sole source of business – to sell it.
Hornsby: I do not see why not and also other types of minority mortgages. The UK market is arguably the most diverse in the world and, with all the looming market pressures, parties will explore further ways to bring new propositions to bear.
What do you think about the Government's plans to introduce home information packs, given that the CML recently stated that they could end up doing more harm than good?
Webster: Everyone in the industry would welcome a speeding up of the homebuying process but, in my opinion, the packs are not the best way of going about it. I think it is inevitable that they are going to lead to fewer homes coming on the market. The prescribed content requires further consideration, especially the format and purpose of the condition report. It is irritating that the Government seems intent on proceeding despite many in the industry pointing out that their plans are flawed.
Sturges: We are in total agreement with the CML's measured and sensible response. All prudent and responsible lenders want to see the homebuying process in the UK made simpler, less stressful and more transparent and while we recognise that the concept of Hips is a good one, we simply do not believe it is a stage where implementation now would benefit either individual homebuyers or the mortgage market in general.
By way of example, as a specialist lender offering mortgages up to 90 per cent LTV, igroup would certainly wish to retain the right to carry out its own independent property valuations. We want to see this right retained as a key element of prudent lending.
Hornsby: This is a real pot-ential nightmare. What started out as a reasonably sound idea to protect buyers and reduce gazumping could now have a major detrimental imp-act on the housing market. The CML has been absolutely correct in highlighting its fears and yet again we have a Government potentially imposing policy in an area where it simply has no idea.
There are numerous implications and issues for lenders in terms of valuations or rather lack of them, costs at the lower end of the market and insurance cover for a market that has no history, to name but a few. We can only hope that in practice someone will listen to our industry and deliver a workable solution.
Did you welcome the FSA's announcement that it plans to introduce exams for lifetime or equity-release mortgages?
Webster: I thought that separate regulation of this product was probably sufficient without the need for further examinations.
Sturges: Recent figures from the CML suggest that while the current amount of outstanding equity-release lending is relatively modest – about £1.5bn at the end of 2002 – its potential is huge, with a possible market size of between £50bn and £100bn. Given this and the consequences of misselling, we join with the CML and other commentators in supporting the FSA's proposals. Equity release is a highly specialised product and one that requires the giving of clear and transparent advice.
Exams leading to a recognised qualification would help ensure this while promoting the credibility and professionalism of the equity-release industry as a whole. However, the examination/qualification process must be balanced and practical so as not to stifle a product which, properly sold, could be an ideal financial solution for those millions of homeowners often described as “asset-rich but cash-poor”.
Hornsby: I am always nervous when I hear about exams and tests in order for people to carry out their livelihood. Don't get me wrong. Like any industry, we need professional, qualified individuals acting in an ethical manner.
The key for me is how it is done, how long it takes and how much it will cost. I think the whole qualification issue needs to be considered carefully and a practical solution put forward that will allow everyone a fair chance of achieving the status they wish, without having an impact on their business. I will therefore reserve judgement for the time being.
John Webster, Business development director, Preferred Mortgages
Bob Sturges, Head of communications, igroup
Sean Hornsby,Sales and mark-eting director, Mortgage 2000