However, let’s look at the mortgage sector in a little more detail.
Technology
More mobile phone technology to achieve faster communication via mobile and iPad/tablets. Information on-the-go will create more furrowed brows staring at small screens and bumping into lamp posts. You may get the information faster but that doesn’t mean you’re going to get the answers you’re looking for.
Lenders will be scratching their heads and trying to work out how execution only works in the new regulatory environment, so they can adjust their online systems. It will be a scramble to get call centre and branch staff trained to give advice. The CML, IMLA and AMI will be busy trying to set up individual registration for mortgage brokers for the FCA. This will ultimately need new technology and some innovative thinking, but it is something worth perusing to enable the higher standards that the industry badly needs.
Regulation
A new regulator in the FCA will be will be looking for firms to base their business model, their culture, and how they run the business, on the foundation of fair treatment of customers as set out in the Treating Customers Fairly (TCF) initiative. It will be TCF over again and more intervention further up the value chain. This means brokers need to dust off their TCF procedures. Lenders however, may find product development more difficult as the FCA focus on risks to consumers and intervene further up the sales process at the product development stage. Lenders also need to be careful how they target products via brokers to ensure the broker is selling into the correct target market.
Funding
Hail Funding for Lending! Lenders can no longer complain about funding constraints, but don’t expect a return of 100% lending any time soon or a rush to fund competitive rates over 80% LTV. Lenders are still sucking in that cheap funding but they need to increase spreads to pay for possible losses, so don’t expect SVR’s to fall too far next year. However, every cloud has a silver lining and this may provide an opportunity for a re-mortgage come back.
Mr Carney the new Governor at the Bank of England
A dedicated low interest rate man who wants to target GDP rather than inflation, which is good news for the mortgage industry. This could be the year for cautious optimism. But watch out, he has no reason to support the UK mortgage market and if we do get growth and he has to increase interest rates in the future he will do it!
The Bridging Industry and Specialist Lending
This is the year for the industry to get its act together, the FCA will be focusing on the sector and there is every reason to think that the sector could take off to fill the credit risk gap left by the major lenders.
I wish you all a very prosperous New Year!
Frank Eve is managing director of Frank Eve Consulting
