Brian Murphy: Blog

Friday 13th January 2012

My belief is that we should now see the market continue to build.

2011 is now behind us and although for the wider economy the news has in general been somewhat downbeat, it was a year for the mortgage market where further stability returned and a significantly greater degree of confidence was re-established, particularly within the intermediary sector.

The final year-end gross lending numbers for 2011 are at the time of writing still to be published. However, although the overall total is unlikely to be above 2010, activity during the four months prior to December had been running slightly ahead of the corresponding months a year earlier.

2012 is unlikely to see any pick-up in overall volumes. Indeed, the CML is forecasting that the overall market this year may be slightly lower than 2011 due in part to the challenge on disposable incomes, fears around unemployment etc, but we do envisage significant price competition to remain in the main mortgage market sectors.

Most lenders have lending targets which for the majority will be similar to 2011, but for several of the mutual organisations will be a significant step up on last year. This augurs well for new borrowers and should mean we continue to see a healthy degree of price competition and some further product development and innovation.

Already since the beginning of the year we have seen Aldermore, one of the more recent mortgage brand entrants, increase their maximum loan to value on their buy-to-let proposition from 75% to 80%.

Accord Mortgages has joined other recent re-entrants in the shape of Woolwich and Nationwide in offering 90% loan-to-value mortgages to residential borrowers, enabling more buyers to access the market with lower levels of deposit or equity.

Overall mortgage product numbers in the market ticked down a little during December, as you would expect due to the seasonal slowdown, but a number of brands have refreshed and re-priced their mortgage propositions already for the new year, and we expect to see numbers continue a slow rise, providing further choice for borrowers as we move further into 2012.

Although the mortgage market is nowhere near the size of four and five years ago, it is in much better shape than we dared to hope in the latter part of 2008 and early 2009.

Assuming that the politicians are able to come up with a credible plan to address the sovereign debt crisis, that the Eurozone does not suffer some cataclysmic meltdown and as a consequence cause the sort of paralysis that affected us all three years ago, we should see the market continue to build on the progress that has been made.  

Brian Murphy is Head of Lending at Mortgage Advice Bureau