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News Review: Property

Reasons to be cheerful despite Europe woes by

Nigel Stockton, financial services director,


I said the first few weeks of January would be telling and I don’t think many of us were surprised by the eurozone headlines of recent weeks. News of France losing

its coveted AAA credit rat- ing from Standard & Poor’s caused severe stock market falls, and with a further eight other eurozone governments to have also been downgrad- ed, the prognosis does not

look good. Christine Lagarde, man-

aging director of the Inter- national Monetary Fund has admitted that we are edging closer to an economic de- pression reminiscent of the 1930s without decisive ac- tion. French finance minister Francois Baroin summarised it well when he said: “It’s not good news, but it’s not a catastrophe.” Enough said really.

UK borrowers Closer to home, the impact of the eurozone crisis and on- going liquidity issues in the wholesale funding markets

n New entrants: Hot on the heels of Tesco, it seems we have another

consumer brand entering (or should I say re-entering) the mortgage market following Virgin Money’s acquisition of Northern Rock. Virgin is a brand heavy weight, being both well established and well liked by the public, and if ever there was a consumer-facing brand to take on and grow Northern Rock’s mortgage operation, Virgin is it. Media fanfare aside, I was extremely pleased to see the promises it published this month to put brokers at the heart of its business dealings and I wish them the best luck. At the time of going to print, it seems another consumer brand giant is also eyeing its move into financial services, with more rumours doing the rounds on Asda’s decision to register ‘Asda Money’ as a trademark. I wonder if this is an emerging trend for the post credit crunch era we live in? Previously, we as- sumed the product was king and it still is in many ways but there’s been such a huge freefall in public confidence that maybe there’s some logic in lenders us- ing the strength of a high profile con- sumer-facing brand to restore a sense of trust with mortgage customers.

will soon be felt by UK mort- gage customers as we are already seeing the first signs of lenders increasing interest rates on their products. In a bid to stabilise our

own economy, the Bank of England’s decision to hold base rates for the 34th con- secutive month in January was welcome news for bor- rowers but this measure alone will do little to get the property market moving. While the ongoing power struggle between the govern- ment and the Bank of Eng- land rumbled on this month with the Treasury Select Committee proposing that

n Loan increases: The Council of Mortgage Lenders has reported a spike

in lending for December 2012, with a 12% increase in loans compared to the previous year. However, if we look be- yond the headline, the £11.7bn in loans was actually 12% less than the £13.2bn advanced in the previous month during November 2011.

n House instructions: Given the strong link between house sales

and mortgage applications, it is al- ways helpful to look at estate agent activity and among Countrywide’s network of 1,300 branches we saw a big spike in house instructions with new listings hitting their highest level since March 2011 at one point Janu- ary, which can only help the chronic shortage of stock out there. Only time will tell if this is a seasonal blip or a new trend which will manifest itself in mortgage applications over the coming months.

n Broker numbers: The Financial Services Authority has revealed that the

number of brokers leaving the market- place slowed in the latter part of 2011,


the Bank’s Monetary Policy Committee is replaced with a new Supervisory Board to improve its accountability, I think we’re all starting to tire of the finger pointing and want more decisive action to support an increase in trans- action volumes in 2012.

Reasons to be cheerful Despite the depressing eco- nomic headlines of recent weeks, with inflation falls and unemployment rises adding to our woes, I’ve seen a number of encouraging headlines that could signal a change of fortunes/pace in future months.

with both AR and DA firm numbers sta- bilising. Retention and recruitment ac- tivities are a major focus of mine in 2012 and it’s encouraging to note that the next generation of intermediary lead- ers are not passing us by and moving into another sector when I passionately believe that the industry still has a lot to offer talented, career-driven profes- sionals.

n Product news: On the product front, Accord has joined ranks with a

plethora of other leading lenders by of- fering a new range of 90% LTV products in recent months. The news coincides with a report from Moneyfacts, which suggests there is a “strong resurgence” of low-deposit mortgages with twice the number of 90% and 95% loans available in today’s market compared to last year. However, if you scratch beneath the surface, the website man- aged to find 49 mortgages available at 95% LTV as opposed to 24 in January 2011. Encouraging yes but unless the volume and associated criteria for these products are overhauled for more home movers to access, this will have little bearing on the wider market.

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