and recession pose risks
It is perhaps perverse given the current political landscape but the single biggest future impact on our mortgage markets could come from Europe. The directive covering Credit Agreements relating to Residential Property may reach the European Parliament by the middle of the year and be all done and dusted before the summer holidays are over. We will then have two years to implement, but the application of Mortgage Market Review will have to reflect any new requirements, which should be broadly clear by June. With the MMR timetable now set for final consultation to close towards the end of March, final rules are liable to appear in June/ July to align with the European resolutions. Europe may well bring bridging and buy-to-let into scope, with more prescriptive affordability measures and a tougher disclosure regime for intermediaries. These could cause MMR to be amended, and not for the better. We have to hope that the FSA sticks to its guns on delivering a level-playing field for advisers, as undoubtedly it is the broker community who work in the customer’s interest to deliver the fairest consumer outcomes. Whilst base rate will remain flat, mortgage interest rates will drift upwards from historic lows as competition for customer savings escalates, driving rates up. Scarce funding will continue to search out quality loans. The government initiatives to promote house building mean those with good builder and estate agent affiliations will prosper. In addition good brokers who will responsibly promote and advise (with the accompanying responsibility) on right-to-buy may be busy, but this may not pay enough to cover the risks. Being mortgage and protection advisers looks like the new
tomorrow by ensuring that customers get the right outcomes and brokers earn sustainable incomes. The great promise could come from whether the industry can deliver new simple products combined with an enhanced basic advice process. The creation of models which can encourage the embracing of a more holistic advice process to cover all the needs of our mortgage customers could and should emerge. The future could be broader
Robert Sinclair, director, AMI
engagement with our customers.
In my mind 2012 was always meant to be the year when everything began to improve, after all we have the Olympics and the feel good factor from that together with a good Euro Championships would surely propel us on to bigger and better things? However, it looks as if I may have been a little lost in dreamland with that, although to be honest no-one really foresaw the issues from Credit Crunch #1 mutate into the mega-storm that threatens to break up the Euro itself. The only thing we can do therefore is to put the Euro issues to one side and assume that things will remain much the way they are. In fact, if anything things are a little clearer now, especially as we have finally seen the much anticipated Mortgage Market Review and know that there is nothing really to fear there. So whilst I agree that lending will be pretty similar to 2011 I think there are reasons to be optimistic, rather than continue to get weighed down by a dark cloud of disillusion. Whilst the doom mongers are still predicting the end of the world, especially where house prices and lending is concerned I disagree.
Mortgage costs will continue to rise slightly, whether or not the Euro issues are sorted, but for different reasons and whilst we may well slip back into a technical recession things do actually feel different to the first credit crunch. For one, lenders are still talking about lending, they still have plans to bring more products to the market and there is every sign that competition will increase, however slight it is. Remortgage business will begin to return as borrowers get ever closer to increasing mortgage rates and a there is a massive amount of people coming off products and moving onto higher variable rates. Now that broker levels have dropped by a third, that is an awful lot of orphan clients to target. Buy-to-let will continue to grow in strength. Competition from direct lending will be strong, especially now the FSA has rightly recognised that advice should be a cornerstone of any mortgage proposal.
Andrew Montlake, communications director, Coreco
sense. Do you want to be a part of the next Bigger Issue? Email
nia@thepublishinggroup.co.uk mortgagE introducEr JANUARY 2012 25
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