The Mortgage Market – Lending
2012 Prediction: £140 Billion
2012: Actual £144 Billion (CML estimate)
2013: £158 Billion
This is the section that is most different to what it could have been, with all the focus at the start of the year on the Governments’ Funding for Lending Scheme, which has much riding on it.
This scheme led the Council of Mortgage Lenders, (CML) to re-boot their 2012 total gross lending predictions from £133 billion to even more than our own £140 billion prediction, estimated at £144 billion.
For 2013 they expect £156 billion gross lending, which if lenders really want to lend around 10% more this year as most have been saying, could be closer to £158 billion. This may seem a little high, but we like to be optimistic and give lenders the benefit of the doubt to start with. We shall see where we stand at the half way point, but the £155 to £158 billion region seems attainable.
To do this, however, lenders need to get their skates on as well as their thinking caps and underwriting manuals out, because low rates alone will not be enough to meet that figure.
Lenders have certainly been talking a good game, with plans to bring more products to the market, enter into new areas and increase competition, even at higher Loan To Values.
With the distraction of the FSA’s Mortgage Market Review now finally out of the way, lenders know exactly what they have to work with and can tailor their requirements accordingly. This is an infinitely better position than worrying about the unknown and it was no wonder they scaled back the way they did.
As things settle down, expect criteria to soften slightly, though not back to the “passport and a smile” book of underwriting, which should be enough to help many new buyers back to the market.
As rates reduce, remortgage activity will no doubt increase especially as those who took out mortgages within the last few years will now revert to higher variable rates.
Although the expected growth in the Buy to Let market did not quite materialise last year, this is still a focus for lenders and we have started to see more and more landlords express an interest in expanding portfolios over the coming months.
The biggest question mark remains over the so-called “Mortgage Prisoners” who find themselves unable to remortgage due to issues around equity, affordability, the removal of interest only or credit.
Although lenders are able to relax their rules for some of these it will be interesting to see if any actually do, as in the short-term at least, the low-hanging fruit in the already well-catered for 75% LTV and below areas will be the main battle ground.