The very latest gross mortgage lending figures from the Council of Mortgage Lenders (CML) continue to show a strengthening market albeit without any considerable monthly leaps in lending which might mark out a ‘boom’ marketplace. Certainly the news is positive particularly when you look at the progress that has been made throughout 2013 and the increasing lending levels in comparison with just 12 months ago.
The CML’s early estimate for September is £16.2 billion gross lending, just down slightly on the previous month (£16.4 billion) but up considerably on the same month last year – in fact September was 41% higher than 2012 (£11.5 billion). Looking at the quarter three figures for this year, gross lending is estimated at £49.3 billion, a 17.6% increase on the previous quarter and 32% up on the same quarter 12 months ago. Indeed, on a quarterly basis we are looking at this past one being the best since quarter three 2008 – and we all know the wreckage of a lending landscape we were left with after that period.
Clearly, the mortgage market continues to grow however this monthly fall in lending – albeit slight – does provide some evidence to hold back the more fanciful claims being made at the moment about the market rising too fast, too quickly.
The great elephant in the room, however, with these latest CML figures is what we can expect in the next six to 12 months particularly given this will see the market impacted by the launch of Help to Buy 2 (HTB2). Of course no actual loans can be made until January – although products have been launched and lenders can warehouse applications – so it will be interesting to see how 2014 kicks off and what the overall impact on the market is likely to be.
Without doubt HTB2 is going to create far greater competition at high LTV levels than we have witnessed in our most recent past. Up until now the 95% market, for example, has tended to be the reserve of the building society sector but given the benefits for the bigger lenders to take advantage of the government’s guarantee, this is unlikely to be the case for much longer. Indeed, the state-owned banks have already shown some of their product cards, and while others will be happy to wait until January to follow suit, those already active in the high LTV sector will probably need to show their hand much sooner.
Which is all ultimately good news for mortgage advisers however we should offer a word of advice and caution to those who might think now is the time to focus solely on mortgages rather than continuing to diversify. Of course we should rejoice in a growing housing/mortgage market and hopefully the extra business it brings, but this does not mean we need neglect important product areas which have probably been vital in the post-credit crunch years. I’m of course talking about protection, conveyancing and the like, but also to my mind one of the biggest untold stories for advisers – general insurance.
I am continually surprised at how few advisers maximise their position in the GI market, especially as it is a natural part of the sales process and there are highly competitive building and contents products readily available. Not only does it benefit the client – only 20% of whom buy it direct – but for the best part of 10 minutes work it can bring in ongoing renewal commission and (certainly with our network) advisers can get access to the best headline terms and commissions in the market. What is not to love about working in this sector? While mortgages may continue to pick up the headlines, advisers should make sure they take full advantage of financial services’ lesser lights.
Richard Adams is managing director of Stonebridge Group
