We’re all moving in the right direction, claims Guy Garrard, head of business development at Tiuta
As a mix of air traffic turmoil, election fever and a good old fashioned spot of British sunshine have dominated our springtime thoughts, the intermediary mortgage market continues to be going about its rebuilding process in a slow and steady manner.
Recent figures from the CML show that gross lending rose by 24% last month rising from £9.3 billion in February to £11.5 billion in March but on the downside the first three months of 2010 saw the lowest quarterly total for new business since 2000. The CML says that March’s £11.5 billion was a 3% rise from the £11.2 billion of lending experienced in March 2009 and reports that the figures are in line with the typical seasonal pattern of March’s lending volumes. The trade body added that whilst this is the lowest quarterly lending total since the first three months of 2000, it is very much in line within its forecast of a gross lending total of £150 billion this year.
The uncertainty ahead of the election and the issues surrounding government support schemes and are likely to have continued to dampen any immediate significant recovery levels but at least it appears that the industry is moving in the right direction without any major peaks or troughs. The industry is treading small steps in order to inch forward but this is no bad thing in terms of the long term gains and value to the industry.
There is also evidence of lender movement away from pure prime mortgage deals and helping borrowers with who may not fit ‘typical’ lender credit scores. GE Money Home Lending has recently announced the overhaul of its product range to cater for borrowers with minor credit blips. The lender says it wants to test the products on full status applicants but has not ruled out catering for the self-employed in future. This is a move that should be congratulated and whilst obviously caution is required, this dipping of the toe in the water approach at least means that there is some degree of choice emerging in the specialist markets.
Of course any market other than pure prime remains a tightrope for lenders. It also seems that the industry is desperate to find the right tag for such a move away from it. Is it complex prime? Is it near prime? Is it light adverse? Is it sub prime? Or is does it really matter as long as it helps those decent borrowers struggling to find an appropriate deal? I suspect many people will come up with a slight variation on the answer but hopefully have the same hopes for a steady move in the right direction.
Moving onto recent developments in the buy-to-let market and Countrywide has reported a stark rise in the number of applicants registering to rent between January and March, with a 48% increase in the number of tenant enquiries. The letting agent and property services company registered 48,332 new tenants in Q1, up 36% from the same time last year. March alone has seen the highest number of tenant registrations at Countrywide since 2004. It adds that on average there are now 4.9 tenants competing for every property compared to 2.9 tenants in January 2010.
With lending volumes still relatively low, increasing numbers of borrowers being classed as adverse and funding problems remaining it is little wonder that the rental market is so strong. I expect that there are a number of lenders, investors and landlords casting an envious eye over such figures. Again this remains a tricky market for lenders but provided they are able to price sensibly for risk, there is no reason why there shouldn’t be a healthy buy-to-let market, in terms of the number of lenders, within a relatively short time.
So, all in all, as we look forward to the summer months the industry shows continued signs of stability and dare I say it some innovation to the marketplace. Let’s hope that any election fall-out doesn’t curtail this impetus and that we maintain this slow and steady path to a long term recovery.
