"I am hoping that we see some action from the government in the Autumn Statement over the chronic shortage of housing regardless of whether the solution is in the private or public sector."
FR: The intermediary mortgage lending market saw strong growth in 2015 – is this something you see continuing?
I expect the split (share) to continue rising in favour of intermediaries in the short term, particularly in the purchase market. This is because lenders are concentrating on product transfers and trying to retain their existing customers. In the medium to long term, I would envisage a number of disruptors in the mortgage market offering digital solutions to increase their market share and to perhaps eat into the intermediary/lender split in vanilla purchase and remortgages.
FR: Many lenders have reduced rates on their tracker mortgages since the Base Rate cut – do you see trackers becoming more popular and what advice would you give to both brokers and consumers?
I do expect tracker mortgages to become more popular in the short term with the outlook for rates to remain low for a period of time, especially with the recent speculation of further rate reductions. Customers must remember to not focus on the headline rate and to read the full terms of a mortgage especially when moving to a tracker. Many customers also wrongly assume that all trackers are linked to the bank base rate – which is certainly not the case. The devil will be in the detail. I anticipate consumers potentially looking for short term trackers of up to 3 years but anyone who may be over stretching their budget should be looking to a fixed mortgage, preparing themselves for a potential reversal upwards for base rates.
FR: What are the biggest issues facing the mortgage market in the current economic environment, and what should advisers be aware of when dealing with clients?
One of the big issues facing the sector is a lack of activity in the purchase market which will in return move the property market towards becoming a buyer’s market. We would hope for the supply and demand to balance out.
Advisers need to be wary of high revert rates from lenders offering attractive promotional rates that see the SVR rate becoming 5% and even much higher.
FR: Do you foresee the supply and demand issue getting worse? What more can be done to ensure that people continue to have access to the mortgage market?
I am hoping that we see some action from the government in the Autumn Statement over the chronic shortage of housing regardless of whether the solution is in the private or public sector.
In order to ensure people continue to have access to the mortgage market, I would like to see the FCA continue to work with the mainstream lenders to address the issues facing the asset rich older borrower and coming up with further later life lending solutions. This market is growing but in order to continue to do so we would like to see further funding and new entrants enter the space bringing new innovate products to market.
FR: How do you think the Referendum and the Base Rate cut will continue to affect the mortgage market in the coming months?
We have certainly seen an adjustment in the market that is evident from the Bank of England’s mortgage approval figures, however it is difficult to say how much of that is to do with Brexit rather than the market taking a breather over the summer period. From past experience the mortgage market has been a game of two halves and this year looks to be no different.
FR: If you could see one headline about financial services in 2016, what would it be?
"FCA reduces the fees that brokers pay to be regulated including FCSC fees". It is unfair that broker’s fees increase year on year due to issues that are not related to the mortgage sector.
