Within a few days this week we saw a somewhat mixed picture in terms of the mortgage market and the levels of lending currently being achieved.
Reflecting on 2009, the CML released its gross mortgage lending figures for the year and they showed the real and, seemingly ongoing, affect that the Credit Crunch and subsequent liquidity crisis has had on the market.
Gross mortgage lending in 2009 fell by a substantial 43% to £144 billion, a greater percentage fall than in 2008 when the total fell by 30% to £254 billion from £363 billion in 2007.
It seems somehow bewildering to even contemplate those last two figures given that the fall in lending has been so sharp.
Can it really only be three years ago when lending was over the £350 billion mark?
It must seem like a lifetime ago particularly for mortgage-only advisers who have been at the sharp-end of such a huge market shrinkage.
Those expecting or hoping for a pick-up in the figures for 2010 are also likely to be disappointed if we are to take the CML’s own predictions for the year as believable.
Last month it shifted down its gross lending figure prediction to £140 billion and said that ‘strong headwinds’ would result in 500,000 less property transactions than it had previously anticipated. In effect the CML believe it is likely to be a case of ‘as you are’ this year with no great change from the levels we saw in 2009.
While the CML’s data hardly gave many reasons to be cheerful, figures out this week from the FSA at least provided a few more positives to hold onto.
Its data for the second quarter of the year showed new mortgage advances totaled £36 billion, a 14% increase on the first quarter and 8% higher than the amount advanced for the same period in 2009. Its figures for new commitments also showed a marked improvement, up 20% to £41 billion on the previous quarter.
These figures are only likely to confirm what most advisers will already know; mortgage business levels in 2010 are a world away from what they were in 2008, let alone those seen back in the days of 2007.
Those who may have been expecting a significant step forward this year will be left disappointed and all signs for next year show that any major boost to the mortgage market are as yet unseen.
In effect, the numbers being mentioned will surely point advisers in the direction of further diversification into other product areas and sectors to supplement their work in the mortgage market.
Cervantes said: “Urgent necessity prompts many to do things,” and it truly is the same message we have been pushing for the last couple of years, namely, advisers need to keep focusing on aligned revenue-generating initiatives, improving their cross-selling ratios and taking the many alternative opportunities available with the mortgage sale such as general insurance and protection as well as branching out into other financial advice-related areas, perhaps equity release, bridging or even focusing on other income-generating areas such as wills and legal services, many of which would be very much welcomed by the clients concerned.
The fact is that there are major, significant events coming over the horizon that may well dampen the mortgage market even further, namely the Mortgage Market Review.
We are already seeing a pull-back from lenders in terms of their appetite for interest-only loans because of the proposals detailed in the ‘Responsible lending’ paper.
Self-certification and fast-track will also be curtailed significantly, perhaps to the point of extinction.
We should also not forget the new capital requirements placed upon banks by Basel III are likely to mean less funding is made available, certainly in the short term.
Whilst there is positivity to be had though with the news that RBS is launching a £4.7 billion securitisation – where any opening up of the wholesale markets is to be welcomed - we are a long way from the improvements required to make a meaningful difference.
A continuation of the current situation for the foreseeable future means those in business must look to the other opportunities outside of the mortgage sector.
To make the most of these it is often a case of getting up and running quickly and effortlessly, and as a distributor with a wide range of ready-made solutions in numerous product areas, we can help you achieve this.
The one-stop-shop does still exist – why not make the most of it?
