News Review: Lending
Lending remains stuck in same old, same old by
David Finlay, intermediary channel director, Barclays
Unsurprisingly we saw much of the same reflected in the Council of Mortgage Lend- ers’ February lending figures when compared to data re- corded in January. Lending in February was
an estimated £10.7bn, rela- tively unchanged on January’s £10.65bn. But the positive that shouldn’t go unnoticed was that this represented a 14% increase on February 2011 figures and the seventh consecutive month to see a year-on-year rise in lending. When commenting on the
latest figures Bob Pannell, chief economist at the CML said: “This indicates that lending for house purchase remains brisk in advance of the ending of the stamp duty concession.” He added that the NewBuy guarantee scheme has the potential to offset the dip in first-time buyer activity that may come with the end of the stamp duty holiday. Let’s hope that this does indeed fulfil some of the potential indicated by Pannell to help maintain the markets current momentum. The publishing of the Fi- nancial Services Retail Con- duct Risk Outlook, which analyses the main risks fac- ing consumers and firms over the next 12 to 18 months, has
News Review: Housing Tenants still need protection for life and critical ilness by
Michael Stoop, managing director Xperience
In estate agencies up and down the country, there is a familiar pattern forming in the way of overly busy let- tings desks and increasingly quiet sales teams as the sales market slows down in favour of the rental market. Historically, the uK has maintained a history of homeownership but, as the economy has weakened, the evidence seems to suggest that this might be about to undergo a lasting change.
With the private lettings sec- tor continuing to grow, ex- perts predict that 20% of the uK population will be in pri- vate rented accommodation by 2020. This also affects people’s insurance needs. Many homeowners understand the need for life and income pro- tection, but with the majority of the population in rented accommodation, the burn- ing question is whether or not the same need is felt by tenants. The fact of the matter is
that there is little difference between a home buyer and a tenant in their need for life cover and income protection, yet worryingly, the lettings
10 MORTgAge INTROduCeR APRIL 2012
sector appears not to have woken up to this fact as of yet.
Many renters have families
and other responsibilities, which mean they cannot af- ford to ignore the need for life and income protection. The same applies for land- lords, who often neglect to consider the consequences of failing to secure them- selves against accident or critical illness. Lettings agents need to
raise their game too. At pres- ent, many lettings agents see their role as ensuring a swift and efficient rent collection on behalf of the landlord. The majority do not consider the personal needs of either
tenant or landlord when it comes to financial manage- ment during, for instance, an extended period of unem- ployment. Worryingly, there are
already many tenants who have already found them- selves unable to meet their financial commitments due to unforeseen circumstanc- es. Currently arrears or late payment of rent is running at around 10%, according to LSL. This figure is expected to increase in line with the growth in the rental mar- ket. For both the tenant and the landlord, this means that the need for income pro- tection is greater now than ever before.
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certainly raised much interest and debate within the industry. The report said: “At an ag-
gregate level, mortgage in- termediaries are challenged by competition from lenders’ direct sales with further fund- ing pressures in the mortgage market potentially triggering a return of the aggressive dual pricing strategies seen in 2008 where lenders offered more competitive products via their branches.” Of course dual pricing is nothing new but any refer- ence by the regulator to such an emotive issue is sure to bring the intermediary com- munity to full voice and right- ly so. This is an area which continues to affect firms of all sizes and it will be interest- ing to see exactly what role
the FSA plays if there is this ‘return of the aggressive dual pricing strategies seen in 2008’ that is being hinted at. Another important point
raised in this report was the concern over smaller lenders starting to offer higher LTV loans. The report said: “In- novation can deliver benefits for consumers, but it can also result in increased levels of complexity, thereby creating potential detriment to con- sumers. There is no doubt that this issue will remain at the fore- front of the regulator’s remit and it’s up to us as lenders to make sure we get this bal- ancing act right and that in- termediaries continue to play an integral role in the advice process.
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