News Review: Lending
Gross lending is likely to remain flat in 2011
by David Finlay, intermediary business director, Barclays
two thirds of first-time buy- er mortgages and over half of home mover loans and remortgages are said to have been introduced by brokers. Figures from the coun-
cil of mortgage Lenders il- lustrate that intermediaries proved a key source of ad- vice and support for people buying their first home dur- ing 2010 with lending via intermediaries accounting for 66% of mortgage sales in terms of the total number of loans in the year and 65% by the value of those loans. intermediaries were also re- sponsible for introducing 53% of all home mover loans, rising to 55% by value, and 59% of remortgages, rising to 62% by value. these figures highlight the
continued importance of the intermediary sector and re- ally underline the value at- tached to the advice process by both first-time buyers and for those homeowners look- ing to take further steps on the property ladder.
House prices the latest forecast from the centre for economics and Business research says that after recording year-on-year growth of 6.4% in 2010, the housing market recovery will stall in 2011, leaving house prices 1.7% lower compared to last year. it says anaemic growth in disposable in- comes and higher unemploy-
ment throughout 2011 will cause house prices to fall, particularly in regions most vulnerable to public sector cuts. in other recent housing
market reports, the average house price is said to have risen by 0.6% on an annual basis but has fallen by 0.1% since december 2010 ac- cording to the LSL/acada- metrics January index. con- trasting data from the Halifax House Price index suggests house prices have edged up by 0.8% in January. But the lender remains cautious add- ing that there remained a 2.4% drop year-on-year and a 0.7% fall over the last three months. inevitably there are a num-
ber of external influences which will continue to im- pact on the housing market but i believe there is little to suggest that there will be any significant swings in house prices in the immediate fu- ture.
Remortgage remortgaging is said to have played a pivotal role in boosting January activity, in- creasing it by over one third compared to december 2010 reports connells Survey and Valuation. it added that a quarter of all connells valu- ations are now conducted for remortgagors - the highest proportion since december 2008. the continued remort-
gaging emphasis was also echoed in the recent asso- ciation of mortgage interme- diaries Quarterly economic Bulletin which predicted that ‘2011 will see increased de-
8 mortgage introducer MARCH 2011
“FIGURES FROM THE CML ILLUS- TRATE THAT INTER- MEDIARIES PROVED A KEY SOURCE OF ADVICE AND SUP- PORT FOR PEOPLE BUYING THEIR FIRST HOME DURING 2010.”
mand for remortgage busi- ness because of uncertainty over interest rates’. the in- teresting addition to this was ‘for those who can meet lenders’ strict criteria’, which is a fair comment and i’m certainly not suggesting that the remortgage market has undergone a dramatic tran- sition by any means. indeed, the cmL released figures stating that loans for remort- gages were at a 13-year low in 2010. But how much of this is down to the dearth in remortgage activity over the first three quarters of the year? i suggest quite a bit and an easy headline is to write is that remortgages tumble in 2010. However, whilst these figures don’t lie, the reality is that Q4 2010 and the begin- ning of 2011 have been posi- tive periods for remortgaging activity. and we expect this to continue.
Regulation the FSa is increasing its aFr for home finance pro- viders and administrators by £3.4m, a 36% rise, which it says reflects enforcement work on the treatment of customers with mortgages
in arrears. according to ami this will result in most bro- kers paying at least 15% more in FSa fees in 2011/12. as a result of this ami has called for a detailed FSa response to explain what the mort- gage industry’s £28m fees are spent on. robert Sinclair, director of ami, says: “Last year’s fees were of a similar amount but included costs associated with individual registration. as this has now been delayed, we must ask why any savings do not ap- pear to have been passed on.” He adds: “the figure seems
disproportionately large giv- en the total cost of £4m paid in 2004 under the mortgage code compliance Board.” in other regulatory news,
mark Hoban, the Financial Secretary to the treasury, has confirmed that the regula- tion of secured loans is being transferred to the Financial Services authority. in de- cember 2010 the treasury launched a consultation on transferring the regulation of consumer credit from the oFt to the new consumer Protection and markets au- thority, now to be called the Financial conduct author- ity.. the government says the
transfer of regulation will es- tablish a single regulator for all residential mortgage lend- ing with consistent standards of consumer protection, and ensure second-charge lend- ers meet the FSa’s pruden- tial standards. it wants the regulation of secured loans to be implemented when the FSa’s powers transfer to the Fca, scheduled for the end of 2012.
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