Given the rather subdued start to 2015, particularly in the mortgage market, I would suspect that market practitioners, especially lenders, will now be going all out to secure business before the end of the year creeps up on them.
In terms of mortgage availability and pricing, there appears to be mixed news. From the latter’s perspective we appear to have come out of a period of rate cuts and record low pricing, at least according to the latest figures from Moneyfacts. It suggested this week that average two and five-year fixed rates increased for the first time in 13 months during August, which may give some cause for concern and push people to act faster when it comes to securing a mortgage.
However, my own view is that the downward trend is likely to kick in again very soon. The reason is all to do with targets and the type of year lenders have had during 2015. Recent figures from some of the major lenders for the first half of 2015 have shown them considerably down on the business volumes they achieved over the same period in 2014. While there has clearly been something of a pick-up during June and July, I’m of the belief that many of the major operators will need to ‘go large’ for the rest of the year to get near to hitting their targets. Which, let’s not forgot, are likely to have been set in excess of their achievements last year.
The simple question is how can they achieve that uplift in activity? And the simple answer is through cutting pricing and shifting their criteria – for the mainstream lenders it’s a simple play and one they will undoubtedly be utilising as we move through the autumn and into the winter. It’s not difficult to see therefore just how important this end of year run-down is for the lending fraternity and I suspect we will see a gradual ramping up of marketing and price-related activity in the weeks ahead in order that they might set out their stall.
Indeed, this is already happening. Nationwide Building Society recently announced that its low deposit, 95% LTV product range would now be available to all customers, earmarking £1bn of lending for this purpose. This is essentially opening the doors to a much wider potential customer base, and the fact that the intermediary community also has access to these deals gives you a true understanding of Nationwide’s commitment to securing volume in this area.
Let’s not forget that 5% deposit/equity deals have been as rare as hen’s teeth over the past couple of years, and even with the introduction of the Help to Buy scheme most lenders were unwilling to commit to much above 90% LTV. This is a major step forward and one can only assume that other lenders will follow the Nationwide’s lead in an area of the market which has been underserved, despite Government intervention.
This shows the type of conversations that are ongoing within lenders as they look to steal a march on their rivals and make up for lost time. It’s not just in mainstream mortgage areas either where we are likely to see increased appetite but other so-called niche sectors like buy-to-let mortgages, where the drive for business appears unending, and sectors such as secured loans, mortgages for the self-employed and a more concerted product push aimed at loans for the retired.
Lenders are clearly not willing to let the year pass without a concerted effort to at least get close to their 2014 figures, which certainly provides more positive news for advisers, their clients, and agents who are likely to be encountering more individuals who have managed to secure their finance needs, rather than being knocked back. Hopefully, this should up housing market transaction levels and result in greater levels of supply coming to market.
