For a market which constantly appears to be striving for some sort of stability and consistency, the UK housing and mortgage market appears to be in a constant state of flux lately. Back at the start of the year most commentators, including myself, predicted strong growth and volumes for the rest of the year. However, little did we know just how impactful the introduction of the MMR rules would be on lenders, or how severe the fallout from ‘booming’ London house prices would be on the regulatory standard-bearers.
In effect, this has caused a bout of severe market twitchiness that few could have predicted back at the start of 2014. Yes, we all anticipated a slight slowdown in lending due to lenders getting their MMR systems and processes in place but we might not have envisaged an increasingly interventionist Bank of England/FPC. The latest proposals on further mortgage rate stress-testing and curbs on lending at 4.5 times loan to income ratios would probably not have been on the ‘prediction lists’ of many back in January.
And so we have a combination of factors that mean the traditional seasonal ‘bounce’ we often get in the property/mortgage markets is actually more like a dull thud. Just today (at the time of writing) the Bank of England published its latest mortgage approval figures for May which showed approvals dropped to their lowest level since June last year. Mortgage approvals for house purchase were 61,707 in May, falling from April’s figure of 62,806 in April. The more positive news from the figures is that net lending has risen – up by £1.9billion in May; the biggest increase since July 2008.
So, once again there is mixed news disseminating around the marketplace. Clearly, the fallout from the introduction of MMR in April will take time to come through in the full quarter two figures but I would be surprised if we didn’t see further falls in mortgage approval numbers for June, and this might continue during the rest of the Summer months as thoughts turn to holidays and keeping the kids entertained, rather than sorting out one’s mortgage finance.
The question is, what can we expect from the rest of 2014? I’m no time traveller and I suspect you would probably need to be to have even an inkling of how the market will play out during the next couple of quarters. I feel sure that lenders must be feeling particularly put-upon at the moment – no sooner do they have to introduce a raft of new measures than the Bank of England is saying, particularly around stress-testing, that the MMR rules were not strong enough. While we have heard strong noises from lenders in the media that they are already acting at these levels (and have been for some time) I’m sure that they would be looking for a period of stability like most others working in this sector.
In terms of conveyancing instruction levels we have seen no major drop-off during the last few months however this might change during the summer months. It seems obvious to say (in any market environment) however right now the servicing of existing clients is vital as is ensuring a full range of cross-sales are achieved – protection, insurance, conveyancing, legal services, etc. All the products you are able to offer should be laid out before the client – that way you can certainly make the most of the clients you have and not just bank on a market tick-up that might be a number of months in the making.
Harpal Singh is managing director of BrokerConveyancing.co.uk