News Review: Lending
Steady as she goes lending is healthy pace by
David Finlay, intermediary channel director, Barclays
the holiday season of July and august are difficult ones to really access as they can often cause a few oddities in terms of statistical data simply because of their seasonal nature. recent figures from the council of mortgage Lenders show that gross mortgage lending was an estimated £13.4bn in august, a 6% rise from £12.6bn in July and a 10% increase from £12.1bn in august 2010. this is the highest monthly total since July 2009 (£14bn) and the highest monthly total for august since 2008 (£19.3bn) which makes for great reading. in assessing lending
figures month after month there seems to have not been too much to say other than activity levels remain reasonably subdued but stable. But compared to recent years this consists of much more of a positive tone than it might first appear. the last thing the market needs is any significant temporary lows or even highs for that matter as this will only work to create some kind of media frenzy which is unlikely to truly reflect market conditions. the steady as she goes current marketplace may not be setting the world alight but it is what we need and importantly the market is performing, generally speaking, as we expect it to. and it is this stability aligned with a bit of positive
momentum that allows lenders and intermediaries alike to build a solid platform going forward.
Regulation the Financial Services authority is often much maligned but there is no getting away from the amount of attention it continues to assert, rightly or wrongly, on the mortgage market. it has just announced the extension of its sale and rent back regulation by bringing all transactions under its control unless it is to family members or a partner. the rule modifications are the result of changes to the Financial Services and markets act 2000 and the FSa says it aims to improve the level of protection for consumers engaging in sale and rent back transactions. this has to be a positive
step for a marketplace that it’s fair to say has a somewhat tarnished image from some unscrupulous activity that has gone on in the past. in other regulatory news the FSa has continued its enforcement activity by cancelling the permission of a broker for failing to hand over client files to the regulator and fined another £250,000 for repeated mortgage fraud and deliberately
misleading
the watchdog. Such announcements are hardly uncommon but it’s good to see the FSa continuing to uphold the standards required to move forward by punishing this unsavory element that continues to drag down the image of the intermediary market.
8 mortgage introducer OCTOBER 2011
Remortgage the remortgage market continues to play an integral role in the mortgage market and has certainly returned to prominence in terms of the amount and value of business being written. But further potential to grow remains. recent figures from cmL showed remortgage lending in July to be up 11% both by volume and value compared to the same month last year. according to the cmL there were 31,500 loans for remortgage worth £4bn in July, up 1% by volume and 5% by value compared to June. However, the FSa’s latest mortgage lending data
“Homeowners con- tinue to ignore how restructuring mort- gage finance can really help with the squeeze being ex- perienced through rising living costs”
shows that remortgage business fell from 38% of new lending in Q1 to 34% in Q2, but that it remains above the 30% it accounted for in Q2 2010. additional data from connells Survey and Valuation suggests that remortgaging was the only category where activity grew month-on-month in august, increasing by 11% compared to July and by a staggering 108% compared to august 2010. With many homeowners
focusing on future interest rate movement they continue to ignore how restructuring mortgage finance, along with
other financial products, can really help with the squeeze being experienced through rising household budgets in terms of food, energy and general day-to-day living costs. this means that remortgage fence sitting could prove to be a costly game for those homeowners in a position to act now, even if rates are held for the foreseeable future. therefore it’s important that we as lenders and you as intermediaries continue to work hard to ensure clients are fully aware of the benefits attached to remortgaging and building a good, consistent level of holistic advice is certainly the way forward in helping to achieve this.
Offset independent
financial
research company defaqto has recently highlighted what we at Woolwich have been saying for some time that offset can offer an effective savings vehicle in a low interest, high inflation environment. But it also important to highlight that offset is a product that should not just be confined to such an environment. there is no doubting that the popularity of offset has grown as increasing numbers of borrowers are having to think more holistically about their financial situation and the long-term value of particular mortgage products. Borrowers are also steadily becoming more aware of the actual cost of borrowing and have become better educated on how best to manage their household budgets and overall finances. all of which underline the potential of offset.
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