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Green shoots offer hope for the mortgage market

The mortgage industry in 2010 has been spared some of the turbulence of recent years, with panic replaced by a more stable environment, albeit challenging for brokers and lenders.

This year has still been a struggle for many but green shoots took firm root in the market’s lexicon, popping up frequently in speeches, market commentary and general conversation.

Some new players entered the market, starting in January with Virgin which bought Yeovil bank Church House Trust, giving it a banking licence to offer mortgages and deposits in the UK.

Tesco revealed it is to set up a lending arm in the UK although it is doubtful the supermarket will gain FSA authorisation before the middle of next year at the earliest.

Metrobank also launched this year.

More relevant to intermediaries, 2010 saw the arrival of Aldermore and Precise.

Precise initially placed itself in the buy-to-let sector before moving into the residential sector in November.

In March, then Chan-cellor Alistair Darling, in his last Budget speech, doubled the stamp duty threshold from £125,000 to £250,000 for first-time buyers, saying the change would mean nine out of 10 FTBs would pay no stamp duty.

April saw network Home of Choice file for administration after takeover talks collapsed. The network was unable to service debts and LSL Property Services completed a deal to buy its assets from administration for £1.5m. It was renamed First Complete.

Lloyds Banking Group became the first of many lenders to tighten its lending criteria for interestonly mortgages in May. Others followed, including Northern Rock and Coventry Building Society.

In July, the FSA released its consultation paper on responsible lending. The paper would become arguably the most controversial and talked about topic in the industry in 2010. Trade bodies warned the regulator that the proposals were “a step into the abyss”.

By early August, Money Marketing learnt LSL was conducting due diligence on Pink Home Loans as it tried to increase the scale of its mortgage proposition. The deal would eventually be concluded by late October for £1.59m.

Paragon Group made its much anticipated return to new lending in September after securing a £200m revolving credit facility. The announcement was well timed, coming shortly after Lloyds indicated it would take a step back from the sector by tightening criteria on its buy-to-let products.

Figures from Halifax showed house prices fell by 3.6 per cent in September, the biggest monthly fall since it had began collecting the data.

Which? courted controversy in November, launching a free mortgage advice service for its members and their families and friends.

Later in November, the FSA released a mortgage market review paper on distribution , which was more widely welcomed than its predecessor.

The regulator proposed firms should disclose to customers whether they consider direct deals. It also floated the idea of replacing the existing labels used to describe a firm’s service with the RDR’s “independent” and “restricted” labels.

Housing minister Grant Shapps hit out at the FSA’s mortgage market review, denouncing it as “a step too far”, marking the first time that the Government has publicly involved itself in the debate.

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The value of an investment and any income from it can fall as well as rise and you may not get back the amount originally invested. Forecasts and past performance are not a guide to future performance. Some information and statistical data herein has been obtained from sources we believe to be reliable but in no way are warranted by us as to their accuracy or completeness. These are Neptune’s views and as such this document is deemed to be impartial research. We do not undertake to advise you of any change to our views.

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