Mini-boom in B2L shows no sign of abating
may was a busy month for the mortgage industry and in par- ticular buy-to-let with no few- er than five lenders launching products into the sector. Saffron and melton mow-
bray building societies, fol- lowed closely by Kensington then aldermore and finally the launch of the first new intermediary lender since the credit crunch scuppered the markets in 2007, Precise mort- gages. the number of buy-to-let mortgages available has grown 70% since September 2009, in- creasing from 179 to 304, and many of those deals are offer- ing higher LtVs. Buy-to-let lender Paragon also reported strong results and indicated a possible return to the market by the end of this year. competition in the sec-
tor has impacted on pricing, and brokers report a positive outlook, with natWest inter- mediary Solutions suggesting brokers expect to do more buy-to-let business this year. residential products are
slowly getting more competi- tive too. aldermore is offering a “complex prime” range of mortgages suitable, it says, for borrowers failing to pass the credit scores demanded by high street lenders. the Post office launched a direct-only 90% LtV, which is encourag- ing for the market in terms of attitudes to criteria, even while it doesn’t directly benefit the intermediary market. Skipton also launched a 90% deal via its intermediary distributors, but pushed the LtV up to 95% for direct-only deals. the number of high LtVs
on the market is evidently edging upwards, though it is clear that tensions remain for
distributers concerned about competitiveness in the bro- ker market. ami has come out strongly against the cmL, asking for more intermediary support (see below), though imLa research out in may
showed the broker market was still dominating uK mortgage lending.
Lending figures for april
show depressed volumes however. the cmL reported that gross mortgage lending
declined to an estimated £10.2 billion in april, down 12% from £11.6 billion in march and 1% from £10.3 billion in april 2009. this is the lowest april total since 2000 (£9.3 bil- lion).
A bite of coalition therapy?
by
Robert Sinclair
director AMI
the last month has been dominated by the election and latterly by the creation of what can only be seen as the truly innovative conser- vative, Libdem alliance. Having now got a govern- ment that will have to deal with the longer term results of their actions or inaction, ministerial departments are now facing severe budgetary challenges. in the medium term this will adversely im- pact on the unemployment figures, which over the last couple of months have been increasing as firms continue to shed labour as they realise they have excess capacity in the new economy. Following the last Bank of
england Quarterly inflation report the Bank is comfort- able that inflation will revert to within target early next year without intervention. they anticipate raising base rate before they withdraw the liquidity introduced through quantitative easing. With mortgage rates drop- ping both through competi- tive pressures and drops in
market funding costs, we will continue to see new and existing rate conver- gence. However this risks an escalating funding crisis as demand for remortgages puts pressure on purchase capacity. Banks are under continu-
ing FSa pressure to look at their mortgage back book, apply the right capital sup- port and cover future lend- ing. this will continue to suppress the supply of new funding. the trauma of another net-
work in financial difficulty has passed with continuing pain for some and relief for many. in dealing with enqui- ries from a range of sources, the arguments about what might be logical, or morally right, is superseded by what is in the contracts. this is both the contracts between the network and the lend- ers and other providers, and as importantly the networks contracts with their mem- bers. it is these contracts that any administrator or liquidator will have to ap- ply and rely on. even if they want to, they cannot apply a moral view. the cmL appears to still
be in denial. despite all that has been thrown at us, brokers are still producing
more than 55% of all lend- ing. However this trade body appears to continue to peddle a branch based pro- tectionist agenda. their re- cent submission to the FSa on extending the approved persons regime, saw all the ills of the industry coming from intermediaries. this would deny the consumer benefits that bringing lender staff into the new authorisa- tion process would deliver and displays a perceived su- periority i thought we might have lost given their contri- bution to the events of the last three years. We all have representative roles to play as trade bodies, but as one of the lender trade bodies per- haps they should take a more balanced view to reflect the breadth of our market. But generally the industry
feels in good heart. in all my meetings people are looking forwards and are dwelling less on what has happened. Plans are stretching out positively, less about survival. that is a really encouraging signal of the patient being discharged from hospital which is a long way from its spell in the intensive therapy unit. For those of us emerging from our third recession, personal therapy now beckons.
mortgage introducer JUNE 2010 5
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