Precise Mortgages

Santander’s confirmation that it is to enter the BTL market is good news for brokers and also for short term lenders like ourselves. Next year I believe we will see a number of lenders opt to go into the BTL market for two reasons, firstly the market for low LTV super prime customers is being dominated by a handful of lenders which is resulting in margin compression. Secondly, the Private Rental Sector is set to grow again next year so there is likely to be more demand than supply.

My guess is that we will see building societies become increasingly attracted because it is difficult for them to compete for prime business as the competition for retail deposits is no doubt pushing up their cost of funds. Brokers will no doubt be the favoured channel of distribution as BTL has never been sold in branch networks in great volumes so in order to get traction new entrants will opt for brokers.

For short term lenders there will be more options available for borrowers to exit the bridge to a long term lender so this is likely to make bridging lenders more confident and should open up additional funding, certainly this is the case from Precise Mortgages’ point of view. So whilst the overall mortgage market might not be that exciting in 2012 certain segments of the market look like they are set for growth.

The Precise Mortgages Road Shows have come to an end and the red London bus that toured the country emblazoned with pro-intermediary messages has been parked for the winter. Many of the hundreds of mortgage intermediaries that attended the road shows completed a survey giving their views on next years mortgage market and despite the challenging environment the results were surprisingly up-beat.

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Last week I was out and about attending our roadshows, driving up and down the country in a 1966 Routemaster bus.

The discussions have been great, especially those that focussed on how we can all work together to make 2012 a better year. A lot of the conversations were about how we get intermediaries’ penetration rate of mortgages going in the right direction.

In 2007 brokers accounted for 62% of all mortgages written, but that has slipped to 47% today. Clearly customers have been attracted to direct lenders because they have been offering competitive rates. HSBC is a good example of this.

To get brokers’ share of the mortgage market heading in the right direction again we need to get more proactive about communicating with consumers so that they get the full story. Intermediaries do a valuable job especially for customers who need advice or who require a specialist product.
They also have access to a wide range of products which more often than not equal or better the rates available on the high street.

Lenders, networks, the Association of Mortgage Intermediaries and brokers need to work together to ensure that customers know the benefits a broker can offer. With the mortgage market looking like it is going to be challenging for the next few years, it is vital that the intermediary share doesn’t drop any further.