Half A Glass…

At a time when negative headlines dominate the economic landscape it is hard not to notice that consumer confidence has taken a battering in recent weeks. Talk of a double-dip recession is on many economists’ lips and whether this is caused by a struggling manufacturing sector, a European crisis that is nowhere near over or issues in the US, China or whatever, the myriad of reasons being thrown up by all and sundry has almost become unimportant to the consumer.

In truth the average consumer still feels like nothing has really changed, the technicalities of a recession are unimportant, it is how they feel and for most, things still feel tight.

However for all this talk I do get the feeling that most are taking a glass half full approach and despite the gloom the good old British spirit has kicked in. A cursory walk around the City outside our office and you can see the change. Offices are filling up, new tower buildings are being erected and bars are full in the evenings. There is an acceptance that we are where we are and we need to make the most of it.

The Mortgage market is no exception and we have been pleasantly surprised how the level of enquiries has held up over the traditional Summer lull, which quite frankly never really happened. In fact, seasonality seems to have all but disappeared, leaving a steady, though relatively flat, stream of business.

Undoubtedly this is a result of several major factors. Rates are incredibly low and all hyperbole aside, when you see fixed rates for 3 years below 3% and 5 years a smidgeon over it is hard not to react if you can. New tracker products are now lower than even the most competitive lenders’ variable rates so remortgaging is back in vogue.

The most pleasing aspect for us brokers is not just the fact that lenders are now tapping us on the shoulders and asking for more business but the return of the smaller building societies who, not able to just compete on price, are looking for new ways to lend again.

These lenders are able to eschew the frustrating tick box mentality of those banks who claim to offer the very best rates, (the reality being that clients are victims of the long, drawn out, “Yes, Yes, er No” approach), and instead offer the ability to discuss trickier cases with a real decision maker on day one.

If the property market is to kick forward once more, then this lending is essential in the new world where credit and risk rules the roost.

Of course there are still potential dangers ahead; although the reality is that in the short-term at least, inflation and potential interest rate rises are low down the list. With the US making clear that they do not expect to raise their rates until 2013 there is every likelihood, especially with weakening growth figures, that the UK will not see a rate rise until mid 2012.

So, whilst everyone knows that the next change in interest rates will be upwards, we could be seeing a further round of Quantitative Easing before we see a rate rise.

The threat is actually a second retreat by lenders triggered by, for example, a further disintegration in Europe or the mighty Bank of America seriously faltering and pushing up the cost of funds and stifling lending appetites.

I make no apologies therefore for suggesting that the next few months could well represent one of the best opportunities to purchase or remortgage. The remortgage benefits are obvious as rates are so low.

On the purchase side the lack of stock is obviously an issue, but whilst this is keeping values steady the gap between vendor aspirations and actual purchase prices seems to be easing. There are also more affordable rates at higher Loan to Values that will help first time buyers.

It will be interesting to see what the rest of this year holds, but I for one will continue to top up my half-full glass.

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