CFI: News Review


Mortgage market moving in the right direction


by Maria Harris, national accounts manager, intermediary sales, Halifax


it might be the height of sum- mer, but there is a way to go before the holiday mood re- ally returns to the mortgage market. However, before looking at


how things stacked up in the month of July, it seems worth mentioning that despite the ongoing challenges the mar- ket faces, it has already stead- ied the ship in most quarters and is building a very sound base from which to grow in the future. on the basis of the figures


that were released during July, there will be no sudden re- turn to the booming demand for mortgage finance that was seen up to and including 2007. the uK may technically be out of recession, but in- dividual households are still feeling the pinch and the re- covery is proving to be more of a slow burn than a blazing success. official figures painted a


picture of an economy stag- nating with gross domestic product (gdP) increasing by only 0.2% in quarter two, well below the long-term average of 0.6%. Significant distor- tions to the data due, for ex- ample, to the royal Wedding, Japan-related supply-chain disruption and unexpectedly warm weather during the spring, however, make the headline figures very difficult to interpret.


Stagnant at face value, the gdP figures


suggest that the economy has broadly stood still over the past nine months. nonethe- less, we expect growth to start to pick up in the second half of the year as the weak out- look for the consumer sector is offset by increased trade and business investment. However, the fact we are


still moving forward and that the private sector is respond- ing well to the pressures be- ing put on it by public sector cuts, is very positive. if, in the face of deep public sector cuts, the economy can contin- ue to move forward and the private sector can continue to respond, the hope must be that the uK moves past the worst of its debt problems quickly. in turn, this will see a


faster return to the more normal market conditions that everyone is looking for. However, there should be no doubt that the recovery is going to remain fragile and this was highlighted by the overwhelming majority of the monetary Policy committee that voted to keep the Bank of england base rate at 0.5%. Seven of the nine-strong committee were in favour of keeping the base rate at 0.5% and there is a consensus that it will remain at this level for quite a few months yet.


Trackers many industry commentators believe tracker products con- tinue to offer the best option for the short term and cer- tainly it seems that rates are not going to rise as quickly as many people had expected at the beginning of the year. Lenders are also beginning to re-price their products and


“The fact that we are still moving forward and that the private sector is responding well to the pressures being put on it by public sector cuts is very positive”


there have been many rate re- ductions issued as the likeli- hood of the base rate staying put strengthens. many will have seen the re-


ductions Halifax have made recently, which will make our products even more competi- tive in the market. the reduc- tions across lenders should stir up the market and give more choice for intermedi- aries and their clients in se- curing the mortgage funding they need. it will, of course, take some


time for this to feed through into market figures and for the moment lending volumes remain relatively depressed, despite the lower rates now on offer. Figures released in July by the council of mort- gage Lenders estimated a gross lending total of £12.6bn for the month of June. this may have been up signifi- cantly on the may figure, but it was down on June 2010 and


underlined the fact that the market remains frail. amidst the challenges,


lenders are still investing a huge amount of resource and effort into developing their product and service proposi- tions. the more they do this, the more brokers and their clients can get access to the mortgages they need.


Build foundations indeed, while volumes in the market are depressed, practi- tioners have an excellent op- portunity to make sure their systems are watertight and to really build strong foun- dations for the years that lie ahead. closer to home, the fact that Halifax stopped ac- cepting applications that con- tained vendor gifted deposits from private sellers attracted some attention. in essence, this change is


about lending responsibly: we have got to make sure that customers get the right prod- uct for their circumstances. if someone is only putting down a 10% deposit, we have to make sure they are taking a product that is priced for that reason. We are still abso- lutely committed to accepting applications where the gifted deposit comes from a profes- sional property developer or builder. Looking back over July, it


is clear there are many chal- lenges still facing the mort- gage market and the wider uK economy. However, if we continue to respond to these challenges positively and ac- cept that the recovery will not happen as quickly as we all want, then we will be very well placed when things re- ally do start to pick up.


mortgage introducer AUGUST 2011 51


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