Speaking at this week’s Financial Services Expo Manchester, the panel - which consisted of Charles Haresnape (Aldermore), Rob Jupp (Brightstar Financial), Martin Reynolds (Simplybiz), David Whittaker (Mortgages for Business) and James Chidgey (Nationwide Building Society) - all suggested gross lending would breach the £200 billion barrier however this would be dependent on lenders getting to grips with the underwriting issues MMR has brought up.
Whittaker said “the impact of MMR will be more than we initially thought” while Jupp suggested the market “could undo all the good work of H1 in H2”. Reynolds felt that the “big issue” would be “how long it takes for lenders to clear the logjams” and if “lenders would be able to process the business in time to complete this year”.
On the issue of whether MMR had landed well, Haresnape said:
“It’s been an astounding success – and you hate to say that about regulation. To me it is good news all round. While I think service has deteriorated in the wake of MMR...this will improve. I think we should now forget about MMR and move on.”
Some suggesting lender struggles with MMR processes and systems might stop the market hitting £200bn of gross mortgage lending. The panel also debated whether there was a housing bubble in the UK at present. Most agreed that any bubble only existed in one area of the country.
Reynolds commented:
“There is a bubble but it’s a small one called London. Cash buyers are fuelling that. In the North for example there are a lot of properties still in negative equity. However the headlines at the moment are all about London and the South East and this tends to influence the Government.”
All were agreed that building more houses was imperative in order to help dampen any potential price bubble. Jupp said: “I think MMR will definitely help here however we are not building enough houses and until we address that problem we have serious issues.”
Chidgey agreed: “There is no co-ordinated plan to build more houses. Help to Buy 1 is however getting housebuilders' building. I don’t suppose anyone in this region (the North West) is talking about a housing bubble. In this country we seem to go from recession to so-called bubble in record time – it is quite amazing how volatile the housing market is.”
Whittaker and Haresnape both suggested that lenders would begin to make changes themselves in order to curb any bubble, agreeing that Lloyds decision to curb its lending in London over £500k to borrowers at four times income would be followed by others. Whitaker commented: “My big concern is that if lenders don’t make changes on a local basis you will have the Government making national changes.”
Haresnape responded: “Lenders will take action themselves rather than rely on the Government to tell them what to do. You will have more following Lloyds’ decision.”
The panel were however in disagreement over when Bank Base Rate would be first increased from its current 0.5% rate. Whittaker was pushing for a first rate rise ahead of next year’s General Election suggesting February 2015 as the date while Reynolds thought an October 2014 rise might be implemented in order to “slow down the pre-Christmas selling frenzy”.
Haresnape was concerned that any rate increases unfolded over a long period. He said: “We must be careful that rates rise very slowly so people can manage their budgets accordingly.”
