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Buoyant mood in market

In Future Mortgages&#39 quarterly survey of 500 top mortgage brokers, we were delighted to record a high level of confidence among intermediaries. Mortgage business is increasing, with 76 per cent reporting a rise over the past three months and only 7 per cent experiencing a fall.

Although the number who have seen a rise in business has fallen from 86 per cent in the July survey, the results are heartening nevertheless.

The confidence that this increase in business brings can be seen in that two out of three brokers believe that business will continue to rise over the next three months. This is marginally higher than the figure reported in the July survey and bodes well for a successful fourth quarter.

However, the longer-term outlook is rather more circumspect. Although 55 per cent still believe that mortgage lending will rise over the coming year, this is a drop of 7 per cent from July. It seems as if broker confidence has taken a small hit but this is certainly nothing disastrous.

In the Future 500 survey, we asked about the breakdown of business in terms of customer type and the survey highlighted that, once again, business was dominated by remortgaging, with 47 per cent of votes.

There remained some resilience from first-time buyers, with 18 per cent of votes, although this was down from 27 per cent in July. The rising star at the moment is self-cert business, which achieved 4 per cent more votes than in July.

The types of loans recommended also remained consistent with the previous survey, with discounts being the out-and-out favourite with 61 per cent of votes.

Flexible loans are making some ground, with 22 per cent of votes, while fixed rates came in third with 10 per cent.

Following the Bank of England monetary policy committee&#39s recent announcement to hold rates at 4 per cent, the Future 500 brokers seem convinced that a low interest-rate environment will continue for at least a year. The most popular prediction for rates in 12 months time (voted for by 27 per cent of brokers) is just 4.5 per cent. Predictions vary from as little as 3.25 per cent to as high as 5.5 per cent but two-thirds of brokers believe that rates will not top 4.5 per cent.

This supports the recommendation of discount loans as the most effective way to take advantage of the lowest cost of borrowing for almost half a century.

The internet continues to provide a useful business tool for mortgage brokers, with 71 per cent using online mortgage applications and decision-in-principle facilities. Around 24 per cent do not currently use these systems but express the desire to do so. This should motivate lenders to ensure that their websites offer business functionality rather than simply operating as brochureware.

We also posed several questions regarding topical industry issues. First, we asked brokers whether the FSA was right in reversing its suggestion in CP98 to make lenders responsible for ensuring that intermediaries hand out a pre-application illustration.

Although a significant number of brokers (46 per cent) did not have an opinion, there was a hard core of 43 per cent who believed that this was correct and that lenders should not have this responsibility. This validation of intermediary activity would have provided an administrative nightmare for lenders and resulted in new systems and time requirements for brokers.

This was one of the issues within CP98 that could have been solved with a technology solution but this would have required significant financial investment that many smaller brokers could not afford.

Brokers also expressed concern about lenders effectively inspecting their sales process and I think that this is why so few supported this section of CP98. The new regulatory regime will place responsibility and accountability on individual firms and I believe that, in our highly professional market, that is why only 11 per cent of brokers support lender accountability.

With legislation in Europe shadowing our own regulatory steps, we were keen to see how many UK brokers were aware of the European code of conduct (a version of our mortgage code) and the European standardised information sheet (an equivalent to our pre-application information). A staggering 84 per cent were either not sure or unaware of these European equivalents.

Although many of our new regulations mitigate those from Europe, it seems as if an information and education programme might be in order to publicise these items more effectively.

One of the most interesting topics we asked about was the support for an intermediary trade body. The Mortgage Code Compliance Board, as in the previous survey, received most votes (65 per cent) but there was a spirited charge on behalf of Namba, whose vote improved by 8 per cent on July.

It should be noted that the survey was conducted prior to the announcement of the alliance between Namba and Aifa. Although it shows the two organisations have a long way to go, progress is being made. It will be very interesting to see whether or not the November survey reflects the opinion that a clear favourite would find the running far easier.

Overall, the results of the survey were positive and the mood of introducers buoyant, which is always good to see.

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