This, to my mind, is too convenient a picture to convey because while it’s absolutely correct to suggest the market did show considerable growth in that period up until MMR implementation, it was not all downhill after that. Indeed, while quarter two this year might well have seen much lower activity because of the regulatory upheaval, after this period there has been a noticeable pick-up.
Take the building society sector, for instance, which has been a mainstay of lending, particularly to first-time buyers and those with smaller deposits over the past five to six years. It certainly grew in lending appetite as the year progressed and one must think this appetite is likely to improve further as we move into the new year and beyond.
The latest gross and net lending, plus the mortgage approval, figures from the Building Societies Association refer to the sector continuing to punch above its weight when it comes to the mortgage market. And you’d be hard pressed to disagree.
The figures for July through to September this year show a continued progression, even accounting for the dip seen across the board in quarter two. Gross lending breached £14bn compared to just £12.5bn in the previous three months; net lending moved beyond £4bn, after only just moving past £1.1bn in the quarter before; while mortgage approval numbers were heading north to 96,642 after being 94,471 in quarter two. All three measures were also considerably up on quarter one 2014 proving the point that building society appetite has increased.
And these, we must not forget, are figures for a period which took in the bulk of the Summer holidays and are only a few months on from the implementation of the MMR where many lenders were consolidating and ensuring their systems and processes remained compliant. With this in mind, the anticipation must be that quarter four figures, when they are released, will be broadly similar to quarter three and stay along the same path.
Which is clearly positive news for the mortgage market as a whole, borrowers themselves and (rather importantly) intermediaries. Even more so when we consider societies’ ability to target borrower niches such as those with small deposits or the self-employed, those requiring help from the Bank of Mum and Dad, or those needing a guarantor.
As mentioned above, potential first-time buyers will be mightily relieved that we have an engaged building society sector because, even though Help to Buy has certainly be able to supply large numbers of first-timers with finance and has acted as something of a catalyst, we still need continued and growing supply that is not so bound by the often rigid Government scheme. For the most part, building societies have chosen to operate outside HTB, using private mortgage insurance to underwrite their risk. Even with HTB2 having two years left to run it seems likely that societies will continue to operate in this way and the benefits for those seeking high LTV products should be obvious from this approach.
All in all, one can expect societies to continue on this path well into the future and, from our own dealings with building society clients, we have seen an openness and a willingness to develop product offerings that cater for a wide breadth of borrower types. It is not all about securing 60% LTV (and below) borrowers because, let’s be frank, there are only a finite number of these in the marketplace. The mortgage market will therefore continue to feel the positive intent of the building societies which makes for a far more vibrant and healthier sector than we might otherwise hope to have.
