Opinions are divided as to whether there will be a further decrease in the second half of the year or whether we will see a levelling off.
But the general consensus is that there will not be a property crash and by 2009, mortgage rates will be stable.
Tony Webster, chief executive officer of Connect Mortgage Group, said: “The survey shows that most of our brokers are thinking along the same lines and that clients should sit tight as there is nothing to worry about. If mortgage rates do continue to fall then this will make repayments easier for the time being.”
The survey also revealed that the majority of brokers (59%) expect a drop in the volume of approved mortgage applications compared with 2007. Remortgaging will be a key trend for 2008 as falling rates make monthly payments more affordable.
Olivia Duggal, independent mortgage broker for Nationwide Consultants in Surbiton, Surrey, said: “As interest rates have come down sooner than expected I believe that more people will be willing to re-mortgage their homes and potentially raise capital to consolidate debt.”
Although almost two-thirds (65%) of the brokers predict that property prices will decrease slightly, they were sceptical about the likelihood of a property crash.
Laurence Hughston, managing director of Mortgage UK in Newport, South Wales, said: “Falling to stable interest rates coupled with a shortage of houses on the market means a crash is most unlikely.”
However, Kevin Banting, managing director of Oak Grange Mortgages in Hedge End, Southampton, said: “Any property crash is likely to be dependent upon where you are in the country. In the South East demand is sufficiently strong to avoid a price crash, but there may be an element of reality checking whereby properties will need to be marketed at realistic values to achieve a sale. Good quality property in good areas will continue to demand a premium and should continue to appreciate in value.”
Mixed sentiments surround procuration fees in 2008 with 43% of brokers saying the situation will remain the same, 22% believing they will increase and 35% say they will decrease. However, most of the brokers surveyed (74%) are not planning on increasing client fees in 2008.
Tony Webster added: “The survey has showed that good professional mortgage brokers have nothing to fear in 2008 and will continue to prosper but I believe a lot of broking firms need to change their operational dynamics and become leaner and more efficient. In a falling market, brokers need to spend as much of their time selling & prospecting and less time on compliance and administration. Firms need to utilise outsourcing companies as this is a great way to reduce their operating costs whilst increasing efficiency.”
