Record lending is likely to be the major talking point of a year that has seen the emergence of a multitude of new lenders, the birth of retention strategies and worries from the FSA over quality of advice.
The Council of Mortgage Lenders expects gross lending to hit £345bn, up from £288bn last year. Many attribute the growth to the continued rise of buy to let and what some call churning – constant remortgaging of clients. But the CML revealed in November that remortgaging had hit a five-year low and put that down to the growth of retention schemes, which have been put firmly in the spotlight after Halifax and BM Solutions launched initiatives in July.
Some claimed these moves were designed to protect lenders from the emergence of new players while one of those entrants, Edeus, has since berated HBOS by claiming its schemes are against the treating customers fairly principles although HBOS has no doubts over the suitability of its deals.
Edeus was joined as a new entrant by Advantage, Basinghall, Close Mortgages, DB Mortgages, ING Direct, Interbay and Stonehaven. Along with BM, GMAC-RFC and ING, Edeus launched instant offers that many think will shape the market going forward.
Stonehaven was the only notable equity-release new entrant although HSBC and Royal Bank of Scotland launched small-scale operations. Brokers that dabble in the market were urged by the FSA to exit the sector or pass business on.
If the FSA gave equity release a hard time, the same can be said for the rest of the market. The regulator said it had doubts about affordability, interest-only mortgages, self-cert, training and competence, record-keeping and mortgages into retirement. The sub-prime market is another problem area in the regulator’s eyes, particularly after it ordered over 200 brokers to withdraw misleading ads.
Critics have pointed to irresponsible lending in the adverse sector as fuelling debt in the UK while claim firms are targeting the mortgage and payment protection insurance markets on the back of alleged abuses.
Nationwide and Portman took everyone by surprise with their September merger, as did new broker alliance Concordia, formed at the end of November.
Another surprise was the U-turn that saw home condition reports no longer form a compulsory part of home information packs. But the base rate rise to 5 per cent by the end of the year was anticipated by many.