TSI
UK Mortgage intermediaries set for record lending in 2015
Mortgage intermediaries in the UK are expected to have secured a record breaking share of new mortgages in 2015, according to a new report from the Intermediary Mortgage Lenders Association (IMLA). Its research into the changing face of mortgage distribution has found that its share of new mortgages by value passed 70% for the first time during the second quarter of 2015 to reach 71%. The third quarter witnessed brokers arranging loans valued at £33.3 billion, the highest quarterly total since the beginning of 2008. As a result, IMLA’s analysis shows brokers were responsible for 69% of new lending by value during the first nine months of this year, up from 61% for the same period in 2014. It puts them firmly on track to surpass the record 66% annual share achieved during 2007. The £85.9 billion of lending intermediaries arranged from the first to the third quarters of 2015 already exceeds the annual totals of 2009 to 2013, and was just 12% short of the 2014 total of £98 billion. The IMLA report examines how mortgage distribution has changed following the deregulation of the market in the 1980s, and looks at how technological advances could change distribution in the future. It attributes the general upward trend in brokers’ market share over the past three decades to several key changes; the widening range of lenders, including the emergence of lenders exclusively using broker distribution; growing complexity of mortgage features and pricing; and most recently regulatory changes including the Mortgage Market Review (MMR). By requiring mortgage sales staff to provide advice rather than just information, with the additional qualifications that requires, the MMR has led many lenders to de-emphasise their branch networks and some smaller lenders to end direct distribution altogether. With increased lender competition, a greater range of products and more would-be borrowers falling into ‘non-standard’ categories, today’s market also leaves brokers well positioned to identify those products that are best suited to a particular customer’s needs. However, IMLA’s analysis also shows brokers’ increased share of activity has not been uniform across the market. Proportionally remortgagers and home movers are using the intermediary channel more than ever, yet the proportion of first time buyers arranging their mortgages directly with their lender increased from 32% to 37% between 2006 and 2014. Despite brokers reclaiming market share this year, the percentage of first time buyers going direct remains higher than it was in 2007 when the intermediary channel was at its strongest. This may be influenced by lenders’ marketing activities to first time buyers. While technological advances have traditionally strengthened direct channels within financial services, the IMLA report observes that this has not happened in mortgage lending where the majority of customers still feel the need to speak to a professional. It suggests this is partly due to the complexity of mortgages as a product, and the sheer number of products available on the market. Furthermore, considerations such as term length and the size of the… Continue reading
Irish property price growth slowing as new lending rules have an impact
Residential property prices in Ireland are continuing to increase year on year but the rate of growth has slowed considerably, the latest official data show Figures from the Central Statistics Office shows that in the year to November prices at a national level increased by 6.5%. This compares with an increase of 7.6% in October and an increase of 16.2% recorded in the 12 months to November 2014. The data also show that prices actually fell on a national level month on month in November by 0.5%. This compares with an increase of 1.6% recorded in October and an increase of 0.5% recorded in November of last year. In Dublin residential property prices decreased by 1.3% in November and were 3.3% higher than a year ago. Dublin house prices decreased by 1.2% in the month and were 3.1% higher compared to a year earlier. Dublin apartment prices were 6.1% higher when compared with the same month of 2014. However, it should be noted that the sub-indices for apartments are based on low volumes of observed transactions and consequently suffer from greater volatility than other series. The price of residential properties in the rest of Ireland rose by 0.2% in November compared with a rise of 1.2% in November of last year. Prices were 9.6% higher than in November 2014. House prices in Dublin are now 33.8% lower than at their highest level in early 2007 while apartments in Dublin are 41% lower than they were in February 2007. Prices in Dublin are 35.8% lower than at their highest level in February 2007. The price of residential properties in the rest of Ireland is 36.2% lower than their highest level in September 2007. Overall, the national index is 33.8% lower than its highest level in 2007. However, experts think that prices will rise by around 6% in 2016 and point out that the decrease in prices in Dublin has more to do with new Central Bank rules on lending than a downturn in the real estate market. ‘Given that the Central Bank’s rules on high loan to value mortgages apply only to first time buyers in homes over €220,000, their impact has been felt most sharply in the capital where affordability is most stretched,’ said Conall MacCoille, an analyst with Davy Research. ‘The recovery outside the capital began almost one year later, so that affordability is less stretched, and there is probably more room for catch-up,’ he explained, adding that the firm expects property prices to rise by some 7% through 2016 as wages grow and tax cuts take hold. Goodbody economist Juliet Tennant also believes that the Central Bank’s new lending restrictions, which limit banks from lending any more than 80% of a mortgage except in the case of first time buyers, have had an effect. ‘Macro prudential rules are continuing to have a dampening impact on the Irish housing market. However, the… Continue reading
Builders welcome UK govt plan to commission new homes
The UK Government, which has announced that it will directly commission the building of thousands of new homes, is being urged to offer small sites for the plan. According to the Federation of Master Builders the availability of small sites is the greatest barrier currently faced by SME house builders when it comes to delivering new homes and it hopes the building of 13,000 new homes on public land will alleviate the problem. ‘The Government clearly recognises that we need to bring more small house builders back into the market if we have any hope of addressing the housing shortfall. Directly funding developments on publicly owned land, with planning permission already granted, should encourage growth of smaller builders and new entrants into the market,’ said Brian Berry, chief executive of the FMB. ‘The public land that is being made available through direct commissioning must be broken down into small and micro plots wherever possible. As the Housing Minister himself has recognised, the smaller the site, the quicker it will get built out,’ he explained. ‘If the Government wants to truly tap into the potential of SME house builders, it should bring forward a wide range of packages of land, including those attractive to the smallest of developers, thereby improving both capacity and speed of delivery,’ he pointed out. ‘As positive as this development is however, it remains only one piece of the jigsaw. The on-going skills shortage is as pertinent for local firms as it is for larger contractors. We desperately need more skilled tradespeople in the industry, otherwise even supportive plans such as those announced today will be challenging for builders to deliver. Boosting apprenticeship training among construction SMEs will be crucial to this,’ he added. The move has been welcomed by the Home Builders Federation (HBF) but it added that allowing smaller builders to access publicly owned sites must be part of wider set of measures to assist SME builders and get more 'players on the pitch'. ‘Increasing the amount of developable land with planning permission is essential if we are to increase output further. Bringing forward public land more quickly has long been a priority for successive Governments, so concrete measures to achieve this are welcome,’ said executive chairman Stewart Baseley. ‘Direct commissioning will only be successful if it speeds up the release of public sector land and results in more house building than would have happened using the more traditional methods of public sector land disposal,’ he added. He also pointed out that a lower risk model could allow larger builders to increase their output still further, while also enabling smaller house builders to increase output and both have an essential role to play. It is not a question of either/or. ‘We desperately need to increase supply even further and faster than the current rate of increase, and speeding up delivery of public sector sites can play an important role in achieving this. In addition, if Starter Homes… Continue reading
