"We continue to invest in developing new solutions for collateral valuation and risk management to help clients enhance the customer experience and ‘time to yes’."
FR: The intermediary mortgage lending market saw strong growth in 2015 – is this something you see continuing in 2016 and beyond?
The growth seen in the intermediary mortgage lending market is because lenders have become far more reliant on brokers and chosen to support distribution via this channel in order to meet tougher regulation and to minimise conduct risk following the PPI scandal. Although there was strong growth in the market last year, the number of mortgages arranged through brokers in 2015 was only half that of levels seen pre-financial crisis, which suggests there is room for further growth in the near-term.
FR: What are the greatest challenges facing mortgage lenders and brokers in the current climate?
Record low interest rates and a wide imbalance between supply and demand is sustaining house purchase and remortgaging activity, a trend which should continue in the short-term. The greatest threat to mortgage lenders in the longer-term is if the UK economy suffers as a result of Brexit and suppresses buyer confidence, which is currently high in many regional markets outside of London, and pushes down the volume of housing transactions.
FR: With Theresa May’s vow to trigger Article 50 by March, what impact do you think Brexit will have on lending and the wider housing market in 2017?
It is hard to say what the impact will be on the economy but uncertainty will increase as commentators speculate on the impact for consumers and businesses. This in turn will impact on the appetite for credit and feed through into house prices where we expect growth to moderate despite record low mortgage rates.
FR: Has Hometrack got any big plans or exciting developments coming up over the next 12 months that you can tell us about?
We continue to invest in developing new solutions for collateral valuation and risk management to help clients enhance the customer experience and ‘time to yes’. Reducing the time to offer has become a key commercial objective for lenders and digital plays an important role in streamlining the application process, something which our current automated valuation services help to underpin.
However, as the competition to provide a faster time to yes increases there will be an extension in the use of digital valuation tools that improve efficiency. With this in mind, we have developed a desktop valuation process that can further speed up this process while managing risk and complimenting lenders use of AVMs for origination and back-book valuation.
FR: How is technology improving the way the mortgage industry works and how can lenders and brokers utilise this?
The use of automated valuation models has changed the market over the last decade and their use has much further to run in the years ahead. Lenders are now using AVMs for a small proportion of home purchases cases and are using collateral data and analytics to manage the additional risks when assessing purchase cases. Further advancements in the assessment of collateral will enable the industry to take the benefits of technology while managing risk.
FR: If there was one headline that you would like to see about the housing market in 2016, what would it be?
A major new government policy aimed at improving the liquidity of the housing market. The current proportion of homes selling each year is well below the long run average, which means house prices remain high as availability is scarce. A move to reform stamp duty and ease the burden on buyers would also be welcome. Almost half the Government’s income from Stamp Duty comes from the London housing market, where the problems of affordability and liquidity are greatest.
