I don’t think anyone believes that we’re out of the woods just yet, however there does appear to be a growing glimmer of hope that the UK housing market is improving. Perhaps the sense of optimism expressed by intermediaries mirrors that of the Council of Mortgage Lenders. In its market forecasts for 2013 published at the end of last year, the CML predicted that the mortgage market could swell to £156bn this year. It believes that the market should continue the recovery started last year, reinforced in part by the Funding for Lending scheme effects.
If the number of loans advanced and the number of property transactions increases this year, that can only represent good news for intermediaries. However I doubt that any of you reading this will be reconfiguring your business plans for 2013 based on the CML’s predictions alone!
The fact that the requirement for a deposit is typically still in the region of 20 percent means that many would-be homeowners are still frozen out of the market and may well remain so if house prices do rise as expected by the Royal Institute of Chartered Surveyors. While the average UK home now costs £161,000 compared with £200,000 in 2007, the RICS confirmed at the end of last year that the average house price in the UK looks set to rise by 2 percent despite the uncertain economic outlook.
It is likely therefore that the rental market will continue to be an extremely important target for intermediaries in 2013. Landlords appear to be feeling pretty confident about the coming year according to a recent survey by specialist lender CHL Mortgages. It revealed that over 70 percent of landlords were feeling positive about the rental market in 2013 with over half planning to expand their portfolios.
The rental market is ripe for intermediaries to explore if they haven’t done so already, with opportunities on two fronts.
Firstly, the obvious target is landlords themselves. They require protection for their investments and I would urge intermediaries to look beyond the obvious landlord buildings and contents cover to other types of general insurance products such as rent protection. This doesn’t have to remain the domain of lettings agents themselves. Certainly it’s an area that we’ve investigated and we think that we’ve got a new and exciting proposition for mortgage intermediaries that will help them develop new income streams from this burgeoning sector. Watch this space for more news soon!
Secondly, there are the renters themselves. Mintel’s home insurance UK report published last October revealed that only about two fifths of people living in rented accommodation own a home contents policy. Accessing and encouraging renters to take up contents cover is a challenge but their rising number means there is a golden opportunity for brokers who can find a way to tap that market.
While residential borrowers remain your natural targets, I firmly believe that attacking the B2L and rental markets can really help boost your business.
So let’s hope that collectively we can all build on the sense of optimism that seems to be working its way through the market at the start of this new year and achieve our individual ambitions over the coming twelve months.
