The first few months of 2015 is bound to be dominated by talk and speculation about the general election
Toni Smith is sales operations director at First Complete
A month ago Robert Sinclair made the prediction that he believed that 75% of all mortgage business will go through mortgage brokers by 2017. Considering just two years ago this level was widely estimated to be less than 50% it is a significant reflection of the changes that we have seen in the mortgage market over the last few months and those that are predicted to come.
The pick up in the mortgage market has attracted a number of new lenders. Anything that increases competition, lowers rates and drives the market forwards has to be a good thing - especially as it is now highly likely that any of the new lenders coming to market will use brokers as their primary distribution channel.
The introduction of all of these new lenders may also play a role in changing the shape of the mortgage market. In order to make any headway and gain any market share the new lenders will have to bring out products that are either more innovative or more competitive than what is already available. This could be good news for existing and would-be borrowers and it will be interesting to see how the big banks respond to this as it is they who typically have the market share to lose. If it drives the big lenders to adapt criteria or promote innovation then we could be looking at quite a different market in a year or two’s time.
The first few months of 2015 is bound to be dominated by talk and speculation about the general election. Usually this creates uncertainty which stems the mortgage market, but with the newly announced measures on stamp duty, we could instead see a spur of activity, encouraging more housing transactions especially amongst lower house prices. There is a worry that this will drive up house prices, but I expect it is more likely to stop the fall back in prices that we have seen over the second half of this year which will help to stabilise the market while making housing that little bit more accessible.
At the other end of the scale in the million pound plus category there are already signs of house prices being lowered to more realistic values, which will bring down the average price of houses. More research will need to be done next year to break property purchases into price bands to see where any rises and falls are.
What will also be interesting will be to see whether the money saved on stamp duty will be put towards larger houses or spent on fixtures, fittings and decoration spurring that market.
New mortgages being taken out are very likely to continue the boom in fixed rates despite the fact that the latest predictions for an interest rate rise have been put back to at least Q3 next year. With the price of fixed rates at an all time low and bank base rate only heading in one direction, there will be very few people finding variable rates attractive.
The final big change to come next year will be preparations for the EU Mortgage Credit Directive. There has already been an 30% increase in the amount of secured loan lending this year according to the Loans Warehouse and that will only increase as secured loans become easier for mortgage brokers to sell. Of course more new regulation comes with further change burdens, but having come through the MMR with all that entails, we are all becoming adept at dealing with the challenges that new legislation brings.
