In my last column I mentioned how 2013 seemed to have got off to an encouraging start and the first raft of statistics available for the year confirm this positive sentiment. Things seem to be on the verge of turning a corner for first-time buyers with volumes hitting a five-year high according to various sources and remortgaging has also enjoyed a solid start to the year with estimates placing January’s levels at around 6% higher than December. This may be partly explained by the annual tail-off that typically occurs around Christmas, but it is nevertheless reassuring to see that borrowers and lenders alike have come out with something akin to all guns blazing in 2013.
One of the driving factors behind this apparent renaissance is the return of something resembling competition in the lending market. We are a long way from the rate wars witnessed pre-credit crunch when lenders fell over each other trying to court new business, but at the same time, neither are things as bad as the dark days of 2009 when remortgagors were pretty much held hostage to their existing lender’s standard variable rate, such was the paucity of options. Product availability is steadily increasing month-by-month and there are now attractive rates to be had for a range of different borrowers rather than just those at low loan-to-value amounts. The Government would have you believe that it is its Funding for Lending scheme that is finally bearing fruit in turns of increased volumes but, while I don’t disagree that this may have helped oil the wheels somewhat, I think there are other factors currently having more of an influence.
Chief among these is that after months after being reluctant to be the first to stick their head over the parapet and make a decisive move on rates or product innovation, lenders are now fearful of not keeping pace with the competition as it gathers momentum. As well as some previously reluctant lenders regaining their appetite, there are also a number of new entrants hovering at the periphery waiting for the right time to make a play. A number of niche propositions have come to market of late such as Investec Professional Mortgages and while they may not upset the established order at the top of the pile, getting things moving in different areas of the market all helps the greater good.
An example of this is the endless drum-banging that surrounds helping first-time buyers, with movers and remortgagors sometimes overlooked in the clamour to get new borrowers on the ladder. Remortgaging in particular plays an important part in our business, so I’m all for anything that helps get things moving in that corner of the market. It currently accounts for 28% of the mortgage market according to figures from LMS, so any consolidation or further improvement on this proportion is welcome.
Even with mortgage volumes edging upwards, brokers shouldn’t abandon the principles that have stood them in good stead throughout the downturn, namely complementing their core business with auxiliary product offerings such as insurance and supplementary services such as conveyancing. It may have been financial need that drove them to consider such options in the first place, but offering a more comprehensive and convenient proposition to their clients – as well as a more handsome bottom line – is reason enough to leave such a service intact.
Harpal Singh is managing director of Broker Conveyancing