First published by Financial Reporter
October is likely to be an interesting month in the mortgage market and I’m probably not the only one who is very intrigued to see how it plays out.
Essentially, this month gives us the first inkling of what that much talked-about ‘new normal’ is. We might all have got used to a market dominated by considerable demand, and fuelled by the stamp duty holiday and purchase activity, but is this likely to hold?
Many believe there is still considerable demand to be cleared which will help maintain purchasing numbers, or are we already seeing a reassertion of the foundations of mortgage advice, namely increased remortgaging and product transfer activity? After all, there are a lot of product maturities up for grabs.
A middle ground
I suspect that we will meet somewhere in the middle however what we all wish to see is a continued momentum of activity. For instance, certainly since the second half of 2020 Stonebridge’s ‘new normal’ in terms of monthly lending activity was around £1bn per month. It will be obvious to all why we’d like the market to continue in that vein and there are some positives that might already point in that direction.
For instance, what about September? In a way, we’ve already been in ‘business as usual’ for over a month – September saw the kids back to school, it saw a considerable amount of pandemic-related restrictions removed, and anyone starting a purchase transaction in England would have known full well they would not be securing any stamp duty saving, apart from those that first-time buyers have had for a number of years.
A departure from the stamp duty holiday push
In other parts of the UK the stamp duty holiday, or its equivalent, was over months ago, and while there is likely to have been a slight spike in completions in England during last month, I would not expect them to be near what we saw in both March and June earlier this year.
In a very true sense, the market was already being weaned off the stamp duty ‘incentive’ many weeks ago and I know for a fact there are a lot of property market stakeholders who wanted this period over with anyway, so that consumers wouldn’t feel like they were in a better position if they pushed and pushed to get a transaction done before the deadline. Stress levels have been very high.
So, that period is over and therefore what can we expect? Well, you’ll already be aware that if lenders get their way, then large amounts of business will continue to be written.
The competition is heating up
I can think of no other period in recent memory where competition has been this fierce, across so many product sectors. As an advisory community, constant price changes I know can drive you mad, but we should all probably understand this is unlikely to change anytime soon. There is likely to be much more of this, and more lenders seeking your business, which is no bad thing for the consumer but will also require something a little bit different and unique if these newbies are going to secure the cut-through they want.
Many people talk about ‘under-served’ product areas but how under-served are they? Mainstream operators have been eyeing up, and active in, these niches for many years while the specialist players are not going to give up their market share easily, and that’s before you add in building societies who are more niche than ever before, and the various focused lenders who operate in areas such as seconds, bridging, commercial and the like.
An opportune time for first-time buyers?
Perhaps it will be the first-time buyer who has most to gain here from increased lender activity and, crucially, Government support. At the recent Conservative Party Conference, the new Housing Secretary (and then some), Michael Gove, talked about the need for more access to finance for first-timers and we should perhaps expect even more of a Government push to get people onto the housing ladder. New lenders might eye up an opportunity here, especially given the Guarantee Scheme will finish at the end of next year.
This makes the months ahead particularly exciting, and if supply can hold up, then the future truly does look bright. It’s a good time to be an adviser, especially given the complexity of the market and the willingness of consumers to put their faith in the advice sector. We should do all we can to make the most of these opportunities and make sure you partner with the very best to get everything out of the many market offerings available.