Large Mortgages & Housing Market Bounces Back
18th May 2015
Since the election there have been a few reports about how things have started to pick up again in the wake of a decisive result, with Rightmove predicting that “supply of homes for sale will increase between 10% to 20% over the next three months”. After the last election in 2010, seller numbers rose by 17% and a similar increase will be most welcome to all.
As we bid farewell to Rent Controls and the Mansion Tax it certainly seems like things are about to get an awful lot busier in the property market and we can only hope that the supply of properties on the market does increase rather than just demand which will inevitably push up prices once more.
Speaking about the Housing Market, after all the pre-election promises about the importance it was rather discouraging to see that there was no real decisiveness over the Housing Minister situation. After some initial confusion we finally learnt that Brandon Lewis has kept the gig which I was pleased to see. Mr Lewis strikes me as very capable and the continuity is welcome, but why oh why is it not the full cabinet position it deserves? Is he also just keeping it warm for Boris in a years time as part of a wider portfolio?
Either way, the housing market has had enough of the demand side perks and we need to concentrate on increasing supply – the right type of housing which is affordable with the associated infrastructure.
Meanwhile, the mortgage market has also begun to move over the past few months where large loans are concerned, with High Street lenders gnawing into the £1 million plus market and stealing back part of the £1m – £3m loan market they lost to Private Banks.
As we mentioned in the Financial Times this weekend, “There’s half a dozen lenders who are now open for business in the £1m -£3m category”.
We have also seen more “middle ground” lenders emerge who specialise in lending to the High Net Worth borrower, but do not insist on Assets Under Management, (AUM), to be deposited in order to lend. These lenders have a “blank sheet of paper” approach to underwriting which means they are more flexible and able to understand, for example, those with various income streams and still offer competitive rates without the usual trappings of a Private Bank.
Above the £3m mark however, Private Banks still come into their own, especially for more complex clients, but for those with relatively simple scenarios, just large figures, some of the products that can be obtained are extremely attractive.
As the mainstream lenders come back into this market and the inevitable drop in pricing that increased competition brings takes hold, the scene is now set for an interesting rest of the year as the battle for business will no doubt become more intense.
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Andrew Montlake, Director and Spokesperson for Coreco, gives his honest and forthright views on the mortgage market, economy and all things property related. Monty was voted "Mortgage Personality of the year 2008", "Best Press Spokesperson" in 2011 and is the current holder of the British Mortgage Awards “Best Marketeer” title. Expect expert analysis, delivered in a down to earth style with a side helping of exuberance.