The mortgage market typically takes a sojourn in August but not this year, given the deluge of news releases. Knight Frank, Purely Mortgages, Halifax, Coventry Building Society, Lehman Brothers, the Government and its regulator. These are just a handful which have bulletined significant strategic initiatives in the past month. Full justice cannot be done to them all here but a preliminary verdict on each is apposite enough.
In the dock first are the four AR networks which have had to silence their recruitment machinery and some incessant propaganda with it. Their identities remain a mystery although informed guesses would surely produce some correct answers. This FSA neutering is not before time. The hijacking of sections of the trade press over the past year to promote highly ambitious mission statements has become as tedious as it is risible. Autumn will doubtless reveal all.
Next to be arraigned was this feckless Government. Hips were an ill-conceived failure waiting to happen. I have no sympathy at all for those businesses that invested big sums in it only months after this regime’s no less desultory U-turn on Sipps. Dead in the water is where the concept will rest, regardless of any lingering trial period.
More positive soundbites included the news that Coventry, Northern Rock, Alliance & Leicester and Scarborough are all taking a dip in the specialist lending pool. This is good news for brokers and consumers but I would recommend that none of the aforementioned over-extends themselves.
The threats to these “experimental” lenders enjoying anything more than token market shares are very real at a time when specialist lending margins are in recession anyway. In an overcrowded sector, only last week it was alleged that GE had lost 50 per cent of its market share in the past 12 months. Moreover, the tactics of, say, Edeus and others (which will offer competitive products but not at historically high procuration levels) will further accelerate margin erosion.
Simultaneously, it is HBOS’s retention policy which could really hurt all the newcomers’ prospects. There is a calculated risk in HBOS’s play – if other mainstream lenders were not to follow suit, then it might find itself in a solitary au naturel position and the pricing of its retention products could come under scrutiny. As ever, HBOS leads and it must surely want followers.
But can you imagine how much less remortgage lending may be possible for the specialist new entrants if, say, Nation- wide, Britannia, Mortgage Express and others started to defend their positions with similar retention tactics?
Brokers are also making some unseasonal and yeomanly moves. Purely Mortgages’ downsizing was a marker for many other brokerages and networks which are operating on the cusp of profitability but are inhibited from making such bold moves by the fear of a trial by public relations.
Finally, there is Knight Frank. Simon Gammon is a capable practitioner and cannot fail with a brand and balance sheet that luscious although I would be astounded if the firm’s mortgage business became much more than an in-house proposition.
Mark Chilton and his start-up team at Savills whole-heartedly clasped the elite consumer market almost a decade ago and it would take a sizeable seven-figure marketing spend to position Knight Frank in the mortgage world where it sits resplendent in the world of estate agency.
Kevin Duffy is managing director of Hamptons International Mortgages