Rob Clifford is chief executive of If I Were You and CENTURY 21 UK
While the latest figures from the Bank of England revealed mortgage approvals fell slightly in July (66,569) from June’s 67,085, the underlying trend shows a steady improvement in the lending landscape. Certainly, there has been a noticeable increase in approvals from the 10-month low of 61,914 registered immediately post-MMR in May. The total lending figures for July also increased to £16.6bn, up from £16.4bn in June and £15bn in May and I would anticipate that figures for the rest of the year, particularly from September onwards, will continue to show a positive increase.
What these figures demonstrate is that the initial teething problems the market experienced as a result of MMR are now well and truly behind us. Indeed, many lenders deserve a pat on the back because a number of them have certainly made great strides in recent months to improve their service levels which, let’s be fair, were dramatically affected by the run up to the new regulatory environment. Many brokers experienced appalling application to offer timescales with the obvious knock-on effects for consumers and cashflow.
I wouldn’t however go as far as to say we are back to a pre-MMR ‘normality’ – certainly not in terms of service. Given the nature of the MMR changes, and the requirements for further verification, the lengthening in time for processing a mortgage from application to offer was to be expected but we are certainly now experiencing more predictable and stable service levels from most lenders.
Our own statistics show a much more palatable position but in the period immediately post-‘MMR day’ we, like most brokers, experienced some totally unacceptable delays from certain lenders.
Thank goodness that the position has become more consistent. In our two mortgage broking businesses the quickest lender average for application to offer over the last three months was 10 days, while the slowest lender average was 40 days. The average of all lenders we’ve supported in that period is 21 days with eight lenders being below average and seven being above – I suspect that is typical of the sector.
With the new school year and Autumn term underway, Summer has well and truly passed for most of us however it wasn’t really a ‘holiday season’ for the mortgage market given that a number of lenders opted to be extremely active and reprice during this time. Many of these changes were moderate but they do show that lenders still have an appetite to lend.
To our mind much of the intermediary repricing we saw was a clear response to the more aggressive pricing models of some direct-only lenders – an approach which was particularly common prior to MMR but was less noticeable from April onwards because of the systems and process changes lenders introduced. It would appear that most of the well-publicised issues such lenders have had to contend with, for example, the need to comply with the cessation of non-advised sales, have now been resolved and the non-intermediated lenders are again seeking market share.
You don’t need to look far to see evidence of this – HSBC’s excellent 1.49% fix for two years; Chelsea’s 1.69% two-year fix and the Post Office/Tesco & First Direct’s 1.89% fix over the same period. The good news for both intermediaries and their clients is that the intermediary lenders have been responding, for example, Norwich & Peterborough’s 1.99% deal, Nationwide’s 2.09% product and Accord’s 2.14% - all fixes over a similar term.
Given the increased demand for advice from consumers, and the growing lender appetite for introduced business, it would seem that everything is now in place for a strong finish to 2014. There will certainly be lenders needing to make up for lost time and hit those potentially optimistic targets set at the tail end of last year.
Therefore advisers should make their presence felt with lenders and their representatives and seize the opportunities presented by the increasingly dynamic pricing regime - such as generating remortgage awareness. September may see some lenders in a holding pattern, yet the majority of lenders state, either publicly or privately, that they have a game-plan to increase their lending run-rate during the last three months of the year, with pricing being an obvious lever. This can only be good news for consumers and for intermediaries.
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