SPECIAL FEATURE: A year to look forward to
2015 will be a year of growth for the mortgage market and we expect gross mortgage lending to reach approximately £225bn.
Although this might seem ambitious, considering lending in 2014 reached around £205.6bn, there are good reasons to think this is a realistic target.
House prices are rising by about 8% a year so if the same number of mortgages are written in 2015 as last year, this should see an increase in lending volumes.
As well as house price growth other factors such as new entrants to the lending market, a low interest rate environment which is likely to continue for the rest of the year and the changes to stamp duty rules should all act as a strong tail wind for lenders and the industry as a whole.
Following the fall in CPI figures last week, many economists have pushed their expected date for a rate rise back into 2016. Another year of low rates from the Bank of England may stop lenders from increasing their rates, but swap rates (from which fixed rates are set) are notoriously volatile, so low base rates don’t necessarily mean low fixed rates, as we’ve seen over the last six years.
There are some excellent fixed rates around at the moment so both those looking to buy a house and those coming to the end of an existing deal should speak to a mortgage broker who can advise them on the best deal for their circumstances as the likelihood is that a rate rise has been delayed and not deferred indefinitely.
With the recent announcements by Virgin Money, Leeds and Skipton Building Society, to name just three lenders, that they are increasing proc fees, more lenders are likely to follow suit.
This is good news for brokers as it recognises their increasing importance, cost effectiveness and the quality of the intermediary channel to lenders.
Brokers should use the increase in fees to invest in the future of their businesses by seeking to expand, improve their processes and technology and focus on re-mortgage opportunities.
There are huge opportunities in the market at the moment and if we are to reach £225bn in 2015 then brokers will need to drive a lot of that volume. Currently brokers account for 65% of mortgage transactions and we expect that to continue.
The decision to reform stamp duty announced in the Autumn Statement last December will encourage more fluidity in the housing market.
The changes will significantly reduce the amount of tax that people buying an average priced home will need to pay which will make it more affordable and attractive for many first time buyers, in particular, to purchase a property.
In theory this should allow many potential buyers to jump on the ladder sooner than they had expected and may well act as a stimulus to demand.