The last twelve months could not be criticised for lack of activity in the mortgage and housing market and, fortunately, the trend has been positive. Which is just as well bearing in mind where we started from.
At the start of the year, gross lending for 2013 was estimated to hit approx. £155bn. However, the CML announced that mortgage lending for January 2013 had declined to £10.4 billion, 9 per cent lower than December. The biggest wins were being delivered for borrowers with a 25 per cent deposit, with tight criteria restrictions on high LTV lending remaining.
By the middle of the year news had turned more positive. Help to Buy equity loan scheme was launched in April with a total of 28,580 new homes started by private house builders in England between July and September; up 29 per cent on the same period last year. Good initial news, especially as builders’ share were on the up; however according to Shelter’s Campbell Robb, “we’re building less than half of the 250,000 homes needed each year just to keep up with demand”.
We then saw a market that seemed to show confidence from May onwards with mortgage rates almost suggesting a return to price wars!
Mark Carney, ‘Canada’s rock-star central banker’ joined the Old Lady of Threadneedle Street and announced that he wouldn’t be raising interest rates from 0.5 per cent until unemployment had fallen to 7 per cent.
HMRC announced plans to track second home owners and buy-to-let landlords for Capital Gains Tax avoidance.
Megallan Homeloans joined the market offering ‘sub-prime’ mortgages. Although a strong health warning put out by AMI for brokers to ensure affordability, stress testing and good advice, was critical with what appeared to be excessive rates.
It was reported that Capital Home Loans would start lending again, having been closed to new lending since 2008.
As we approached the final months of the year, in October the Government pulled forward the launch of its Help to Buy Mortgage Guarantee scheme.
Building Societies reacted to higher H2B rates with Yorkshire Building Society recently launching a host of new products, while the Furness Building Society has a fee-free 5 year fixed rate at 4.75 per cent – undercutting the Help to Buy interest rates by around 0.25 per cent.
Despite their best efforts to improve their reputation the banks (in the form of Co-op & RBS) hit the headlines again for poor behaviour. More banking world own goals.
Precise puts away another securitisation in November and the market appears to be up for it.
Figures released in November show house prices are continuing to rise by an average of 0.8 per cent and we have officially been experiencing economic growth for nearly 12 months.
The removal of FLS also signals an improvement in funding market conditions, while run rate suggests that gross lending will top £175bn, approx. 13 per cent uplift on 2013.
So what does this mean for next year?
The imminent arrival of MMR will be good news for intermediaries with the ban (almost) on non-advised sales resulting in many lenders not having the capacity to service client mortgage needs in an improving market. There are already signs that product innovation is trickling through and talk that 2014 will see us top £190bn in gross lending with consumer confidence improving as the recovery takes hold.
Dev Malle is group sales director at myhomemove