"It’s difficult to keep track of advances in smart technology even over a 12-month period, suffice to say though that its influence is never far from the plans of lenders across all sectors."
If the saying ‘a day is a long time in politics’ is anything to go by then this year must have felt like an eternity for some. Working within financial circles often means that a day can pass by at the blink of an eye and a year not too far behind. So it only seems like yesterday that Barclays was asked to produce its thoughts on what to expect from the market in 2016. Now, as a disclaimer, this wasn’t a prediction piece as such and many of the points were more general than specific in regards to expected trends over the course of the following 12 months. What it does help underline though is that not all events and expectations were totally out of the blue.
So let’s revisit some snippets of our 2016 expectations and how these actually panned out.
As a market we’re permanently exposed to a range of outside factors which may ultimately influence the UK economy and permeate down to funding lines and risk. Having said that, as it currently stands, the lending arena is in its strongest place in recent years to sustain any hits. Meaning we can look forward with far more optimism than pessimism.
Little did we realise the full extent of this sentence, but generally speaking the mortgage market has stood up well throughout a period of uncertainly. This is largely due to some increased stability experienced in recent years which has helped reinforce the robustness of the lending arena. And this statement is as appropriate when looking forward to 2017 as it was back then.
The remortgage sector improved over the second half of 2015 but still hasn’t generated the progression which it could and should have done in recent times. So will 2016 be the year of the remortgage? Frustratingly it remains difficult to say. The potential is certainly there. However, there is still the question mark hanging over when an interest rate will manifest itself. Exact predictions remains difficult and current indications appear to point to 2017 rather than 2016, although there is still room for a surprise from the Bank of England Governor Mark Carney somewhere down the line.
Obviously the ‘surprise’ interest rate cut back in August helped to encourage more activity within the remortgage sector, although in fairness business volumes had picked up even leading up to this. So could it be classed as the year of the remortgage? Well, this might still be too lofty a title but a growing number of opportunities did continue to present themselves and, when you consider the challenges surrounding regulatory and policy interventions in the buy-to-let sector, it certainly did rise in prominence for many intermediaries. Is there still more potential to be realised in 2017? Most certainly.
Competition within the mainstream and specialist markets has been evident throughout this year and this is widely expected to continue in the year ahead.
Thankfully this was pretty much a given. Having said that, it’s not just headline rates which have seen intense competition and some record lows. Recent data from Moneyfacts suggested that the number of fee-free deals available to those looking for a fixed-rate mortgage has more than doubled over the past year. We’ve also seen some strong movement amongst the medium and longer-term deals which have risen in prominence and profile thanks to growing demand from borrowers. And this demand has also been reflected in the emergence of some highly competitive rates.
The second charge sector will be an interesting one to follow in terms of the well-publicised regulatory shifts in the offing.
Preparation for the implementation of the Mortgage Credit Directive had started long before the end of 2015/early 2016. However, despite the long lead-in time the early months of 2016 remained crucial for lenders to demonstrate their support to intermediary partners as to where, why and how they were implementing elements of the directive. Thankfully, this deadline passed relatively free from any turmoil and was largely business as usual for well-prepared providers.
One sure fire thing for 2016 will be an increased reliance on the intermediary market from a growing number of lenders, both in the mainstream lending arena’s and the specialist ones. As a result more investment will take place in relation to systems to ensure these relationships are as efficient and effective as possible. And it’s also safe to say that technology will be at the forefront of 2016 in many ways, shapes and forms.
You only have to look at how many lenders have made service and support enhancements, both online and offline, throughout the year to realise that if there ever was a ‘sure thing’ then this statement was it. It’s difficult to keep track of advances in smart technology even over a 12-month period, suffice to say though that its influence is never far from the plans of lenders across all sectors. 2016 has seen intermediaries evolve in the way they attract and interact with existing and potential clients. This has led to hefty levels of investment from lenders in upgrading systems and the engagement process with both intermediary partners and direct customers. And with forward-thinking intermediaries integrating more and more smart technology into their offerings it’s clear that lenders can ill-afford to take their foot off the gas as we move into 2017.
