Bob Hunt is Chief Executive of Paradigm Mortgage Services
In my last blog I questioned when we might have some clarity regarding the Mortgage Market Review particularly when it came to a suggested timetable of potential rule changes. Far be it for me to suggest that Hector Sants is an avid reader of my blog but days later, in his speech to the BBA, the chief executive of the FSA answered some of those very questions I had put forward.
For those who believe the last thing the mortgage market needs in 2011 is more regulatory change, the speech provided some welcome news. Sants revealed that the FSA will publish its regulatory framework for MMR this autumn, and it will be preceded in the summer by a full impact analysis which will consider both the conduct and prudential perspective. He also clarified there will be no rule changes for the mortgage market to digest before 2012, a decision which may give the industry a small degree of solace.
However, perhaps the major positive from this announcement is the acceptance that the regulator is still in full-blown consultation mode when it comes to MMR. There remains a real opportunity for further communication regarding the proposals that have been published to date and the industry can continue to lobby with all its might to ensure that some of the (quite frankly) unworkable and unpalatable ideas that have already been floated by the FSA do not make it to the rule book.
Clearly MMR will be a major issue to be confronted throughout the rest of the year but I sincerely hope that the industry is now able to get on with the business of developing a far healthier marketplace, rather than being stunted by the potential for further MMR-based rule changes. With this now ruled out, at least in 2011, we should all be focused on the job in hand. Yes, some lenders may already be shaping their business for MMR regardless, however, there will be no dotting of the i’s or crossing of the t’s until next year at the earliest.
We have perhaps already seen evidence that the market is working hard to mend itself and is confronting the issues which have stopped it from moving forward at a much quicker pace. There has been a recent healthy dose of new 90%-plus LTV products put back into the market with the specific aim to get more first-time buyers onto the property ladder. The amount of lending that will take place at such levels remains a moot point however we should all be reminded that even the longest journey begins with a single step. Maximum LTVs have now been creeping up for quite a while and to see a much more competitive 90%-plus market is a welcome sight.
Intermediaries should also be enthused by signs of life in the remortgage marketplace – a sector which has hardly been the healthiest in the last couple of years. All signs appear to show us on the cusp of the first Bank Base increase from its historically low 0.5% position; the money markets suggest May to be the likeliest month and with this ‘feeling’ seeping into the mindsets of the many thousands of borrowers still on their lenders’ SVRs, it is to be hoped that brokers can anticipate and capitalise on the far greater remortgaging interest that is beginning to show itself.
We recently urged brokers not to wait for potential remortgage clients to come to them, instead plant the seed of what is available right now with those who may well be looking to secure a new product. Now is the time to let them know what the market is really like in terms of lender appetite, criteria changes, and product offerings. Their perception of the market may be far different from reality especially if the last time they remortgaged was over three years ago. Also, many potential remortgagors may find they are the borrowing equivalent of persona non grata, especially if they have been in any way, shape or form ‘specialist’ in their mortgage needs. Finding this out before a rate rise and the subsequent remortgage ‘loan grab’ could be a blessing; they are much more likely to find a deal prior to a massive influx of interest than joining the back of the queue when the MPC do finally make the decision.
So, as we step into Spring there could well be a more positive feel to the mortgage and housing market; it is therefore imperative that brokers are positioned at the front of the field to (as Linford Christie used to say) ‘start on the B of the Bang’.
