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Sally Laker: Recovery position

The overriding feeling among brokers and lenders at the Mortgage Intelligence annual conference last week was cautious optimism on the outlook for the mortgage sector into 2010. A number of economic factors suggest things can only get better and dynamic, proactive brokers are well positioned to take advantage of any upturn.

This view was recently endorsed by the Association of Mortgage Intermediaries which believes, with the regulatory pressure on lenders to improve capital positions, it is likely there will be an increase in lending and predicts gross lending to rise from £145bn in 2009 to £150bn-£170bn in 2010. It reports the recovery from the recession is now under way.

Confidence in the housing market has risen to its highest level for two years, with 79 per cent of homeowners expecting values to rise over the next six months, says website Zoopla. which points out confidence drives transaction volumes which drives house prices. But with lending remaining constrained, transaction volume cannot recover as strongly as demand suggests it should.

Buy-to-let is hot to trot over the medium term and is being tipped by brokers and lenders as a growth sector. We are also seeing some more attractive products to encourage investors.

It is clear that housing supply must increase to match population growth but I am concerned about the consumer’s ability, or inability, to purchase property due to lack of funding. The Government may end up relying on BTL investors to provide rental property but, to make this happen, the BTL market needs assistance from the banks and, for various reasons, this is not yet happening. has seen enquiries from property investors rise over the last six months. It says there are indications that some sections of the market are stabilising. For example, enquiries from landlords looking for investment properties has doubled over the last six months.

Investors are looking to buy property while it is cheap to maximise future yields.

The National Association of Commercial Finance Brokers is calling on the FSA to think long and hard before it makes buy-to-let a regulated transaction. It points out that there have been numerous calls for the sector to be regulated and many lenders have been treating BTL as a regulated contract for some time but the primary problem is the refusal to acknowledge that BTL is a primarily a commercial transaction. It is not – as it has often been painted – either a simple investment decision or a get-rich-quick scheme. A loan used to buy a property to be rented out is a commercial investment and is really not an investment for the average consumer unless they have done their homework.

The call for regulation is to protect novice investors who have been sucked into BTL investing by tales of millionaire property landlords and endless TV programmes and who now find themselves with a falling investment and struggling to find tenants. Regulating the mortgage used to buy a BTL property would not prevent this, the NACFB points out. It says the investment vehicle for a buy-to-let is a property, not itself a financial product, so the FSA will be unable to protect consumers here.

Sally Laker is managing director of Mortgage Intelligence and Mortgage Next


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