Lenders are going to batten down the hatches this year and pull a significant amount of money out of the residential mortgage market.
I’m sorry to be the bearer of bad news but it’s best just to rip the plaster off.
While not one lender is brave enough to hold its hands up in public and say it is planning to do less mortgage lending, behind closed doors they are telling their key distribution partners this unhappy truth.
It might seem unlikely after a bumper January and February but that was a fillip.
Network heads the market over have been told to expect between £4bn and £6bn less done this year by one of the biggest intermediary lenders in the market.
The lender in question must remain nameless but it’s safe to say if they do pull this whack of funding it will be felt by brokers and not branches.
Other mainstream lenders are having major servicing issues with cases piling up into backlogs of up to six weeks.
The plethora of criteria changes, product pulls and the suspension of entire ranges by lenders in the past few weeks is part and parcel of this adjustment.
Forget MMR – curbing interest-only criteria and loan to values is a convenient way for lenders to do less lending while tightening up the quality of their back books at the same time.
And the mutuals and “tier two” sized lenders like Northern Rock, Accord and Coventry are struggling to keep up with borrower demand as their flood gates open when the big guys pull the product plug.
This tightening is likely to come soon – Council of Mortgage Lender stats paint a very pretty picture of lending in January and February – over a billion and a half ahead of the same months last year.
But if the lender trade body’s forecast for this year accurately reflects lender appetite, then we’re already way ahead.
It’s not much fun but expect the spring to have a little less bounce than we were hoping for.