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Robert Sinclair: Mortgage business is heading for calmer waters

Robert Sinclair MM blog

As we near the end of the year, brokers are clearing their pipelines in the run-up to Christmas but as 2013 beckons, it does feel that we are in a more stable and positive environment than last year.

It is easy to forget that we were still in the depths of the credit crunch two year ago and how uncertain we still felt at the end of 2011.

At a conference last year involving about 40 of the leading lights of the mortgage industry their consensus predictions for gross mortgage lending for 2012 ranged from £125bn to £140bn. One pitched as low as £95bn. The out-turn is likely to be £143bn.

At the same conference last month, similar industry gurus were giving predictions for gross lending in 2013 in the £135bn to £155bn range.

That we have seen such a significant shift in expectations in the last 12 months indicates that we may now be sailing towards less choppy waters.

With the mortgage market review now delivered, the industry is now now debating interpretation and the finer detail and although it feels as though there is still a lot of work to do, there are new priorities.

Ensuring the economy avoids the dreaded “triple dip” is crucial and it is becoming clear that a key driver to kick-starting matters is a more active construction industry principally driven by a stronger housing sector.

The initiatives already launched by government will have an increasing impact in 2013. What might be required is more fuel to be added to get things really moving.

This would be preferable to more new ideas, apart perhaps from a return to Stamp Duty relief on lower value transactions.

Many feel that by more specifically targeting the Funding for Lending scheme we could get more funds through to higher loan to value products and this might deliver quicker results. In addition, further pushes to both FirstBuy and NewBuy will give impetus to what is a developing market.

From a trade body perspective, we are now moving into the period of the year when all the regulators want to talk to us about their plans and budgets for 2013.

This is becoming even more complex, with the FSA split due in April 2013, meaning budgets for both the PRA and FCA.

In addition both the FOS and FSCS have been undertaking more fundamental reviews of their fee charging structures, which means that the consultations this year will be more complex. The options on such areas, however, are limited, therefore this tends to end up as a debate on how we cut the cake, not its size or content.

The FSA continues to voice its concerns on activity the bridging sector. It is still getting market intelligence that residential loans that should be regulated are being written on an unregulated basis.

The legal definition of what make a loan regulated is that the borrower has an intention to live in the property. If this is the case, then it will be a regulated loan.

The FSA is studying this area and firms need to work within the rules or they risk losing their right to trade. This is potentially bad for the reputation of the industry and is certainly not good for consumers who we are there to protect.

Robert Sinclair is chief executive of the Association of Mortgage Intermediaries

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