Q: What are your predictions for the mortgage market in 2008?
Eddie answers: Many of those in the mortgage sector may reflect on 2007 as an ‘annus horribilis’. The fallout from the liquidity squeeze in America, the introduction of Home Information Packs (HIPs), and volatile rates all made great headlines but left many feeling a little punch-drunk to say the least.
But what can we expect for 2008? More of the same, or will we see the green shoots of recovery? After dusting off my crystal ball, I predict it will be a bit of both.
Feeling the credit pinch
The last six months has been a real wake-up call to the industry. Never before has so much business been declined as has been of late.
As lenders’ watchwords became ‘risk averse’, the rest of the mortgage industry found itself in unchartered territory, with LIBOR doing more to dictate interest rates than the Bank of England.
The far-reaching implications affected everyone and there are many big players out there in the broker market that have had to study their financial navels more than once as a result.
Trying to be more optimistic – New Year, new start and all that – there is good news, with a number of firms planning big investment in sales and marketing to reverse recent trends and do more to support beleaguered brokers over the coming year.
Overall, I predict that there will still be some big names that go bang, but there will be some aggressive market share acquisition by sleeping giants.
Finally getting HIP
As we know, 2007 was the year of the HIP, and it was far from plain sailing. The eleventh hour intervention of the Royal Institution of Chartered Surveyors only delayed the inevitable as the government bulldozed opposition and brought in HIPs at breakneck speed.
In view of this shambolic introduction, I predict that 2008 will be a year of consolidation among HIP providers after many fell for government rhetoric and were left disappointed by the shortcomings of what made it into the market.
From this morass, I believe we will see a few big players emerge, but don’t be surprised if a big name goes bump – it’s a lesson in never to trust what a government says it’s going to do.
Legal issues
Talking of consolidation, 2007 witnessed a great deal of it among the conveyancing fraternity too, through mergers and acquisitions. I predict 2008 will be much of the same as ‘big is best’ becomes the mantra for conveyancers in reaction to changing market demand.
2008 – the year that property sales go digital?
When its e-conveyancing stall was set out several years ago, 2008 was to be a critical year for the Land Registry. A nationwide chain matrix was to be operational by the Spring, offering a beacon of transparency in the otherwise murky and precarious world of the property chain, by putting it all on a computer screen – or so we were promised.
Beyond a few pilots in 2006 and early 2007, not much has been seen or heard of this since, so your guess is as good as mine as to whether it will appear this year. The moves towards electronic signatures and online funds transfers were also expected to make good progress in 2008, but at present their future remains unclear.
The debacle around digital deeds has done little to inspire confidence that the Land Registry is adept at technology. The service that allowed online access to deeds was withdrawn after it was found to be a target for identity fraudsters.
Transparency to the fore
Referral fees have always been a pretty controversial subject, with a lot of pressure on the regulator to reintroduce a ban. I predict this year will be a defining year for transparency of fees.
If referral fees are to remain, there will be a demand from all regulators that they are transparent and disclosed. This could lead to some high-profile cases where both lawyers and introducers are rapped over the knuckles for non-disclosure – with some painful payback incurred.
2008 – A curate’s egg?
Overall, if 2007 was an annus horribilis, then 2008 is looking like a curate’s egg – good in parts. Too much has happened in the past six months to expect a swift return to business as usual and there may be more upheaval ahead, but there is still money to be made.
Consolidation may be the order of the day in many sectors as we all adapt to the changing market dynamic, but it is far from a bleak outlook. If some good has come out of the last 12 months, it is that the market is smarter, leaner and, perhaps, a little less naïve. While some will remain too risk averse, those who brave the elements are the ones who will be most likely to enjoy a good year.
