The only thing we can do therefore is to put the Euro issues to one side and assume that things will remain much the way they are. In fact, if anything things are a little clearer now, especially as we have finally seen the much anticipated Mortgage Market Review and know that there is nothing really to fear there.

So whilst I agree that lending will be pretty similar to 2011 I think there are reasons to be optimistic, rather than continue to get weighed down by a dark cloud of disillusion. Whilst the doom mongers are still predicting the end of the world, especially where house prices and lending is concerned I disagree.

Mortgage costs will continue to rise slightly, whether or not the Euro issues are sorted, but for different reasons and whilst we may well slip back into a technical recession things do actually feel different to the first credit crunch. For one, lenders are still talking about lending, they still have plans to bring more products to the market and there is every sign that competition will increase, however slight it is.

Remortgage business will begin to return as borrowers get ever closer to increasing mortgage rates and a there is a massive amount of people coming off products and moving onto higher variable rates. Now that broker levels have dropped by a third, that is an awful lot of orphan clients to target. Buy To Let will continue to grow in strength.

Some lenders of course will try and fail yet again to up the amounts of business through their branch networks, especially now the FSA has rightly recognised that advice should be a cornerstone of any mortgage proposal.

In fact, Euro aside again, what is really worrying some in the City is actually the potential speed of an upturn. If the Euro does not go Kaput , if there is a feel good factor, if job losses are not as severe as thought and if the costs of QE do lead to higher inflation for longer and the global slowdown begins to turn toward the end of the year, what then?

I know that is a lot of ifs, but someone needs to think about these things. For those hard working brokers who have survived this long, the exceptionally dim light at the end of an extraordinarily long tunnel, could prove to be the brightest light for many a year.

The news headlines are screaming from this morning papers that all is not well, traders are pictured with head-in-hands alongside graphs dropping off a cliff and Mr Peston is everywhere again – sounds like a preview of Credit Crunch 2 – Revenge of the Markets?

Looking back at the blog postings that were written during the heady days of the 1st crises there are many similarities. Back then the speculation went from bank to bank until the pressure became too much and one by one banks were rescued. There was then a brief lull, some began to believe we were out of the woods and then there was Lehman’s.

The question is are we now seeing the same in the Eurozone? Speculation has heaped enormous pressures on the “outlying” Euro countries and one by one they have been bailed out, but this cannot go on indefinitely. So which country will emerge as the Lehman’s’ of this crises?

The European Central Bank seems to be spinning round in ever decreasing circles, last month raising interest rates and this month buying bonds, or rather saying it is buying bonds, but rumours abound that they are not showing their faith in the crucial countries of Italy & Spain. As the interest rates of those nations bonds edge towards the 7% level, the need for a bailout of almost unfathomable proportions draws nearer.

As each country totters closer to the edge so the financial pressure intensifies on the big two, France and Germany, and it seems their citizens are not prepared to finance their European partners indefinitely.

What they are seeing are other nations accepting their dosh whilst the politicians struggle to push through the reforms needed to ease the pressure, through a combination of public backlash, political infighting and just plain incompetence.

The very future of the Euro is on a knife-edge and swaying in a Force 9 gale.

But there is perhaps a more serious issue from across the pond. The USA is struggling and is on the brink of dropping back into a recession that threatens to drag the rest of the world with it. Again, party politics is playing its part with a group of extremists known as the Tea Party wreaking havoc.

If the US proves to be the Lehman’s’ , well, things will get tough for a while!

You could say that all of this is the markets revenge. Revenge for not being allowed to run its natural course and wreak even more havoc, stemmed by bailouts, handouts and the printing of lots of money.

As the irrepressible Robert Peston writes in his blog, “The overall volume of indebtedness in the economy is … still with us – although it has been shuffled from financial sector to public sector. And if you took the view four years ago that the quantum of debt in the system was unsustainably large, then you would argue that by propping up the banks, the day of reckoning was being postponed, not cancelled.”

As an excellent Newsnight debate last night all agreed, “the problem is the politics”. They have to get involved, they have to do something, but their very actions have a resultant effect.

So whilst many fear a credit crunch emerging out of Southern Europe the issue is whether this spreads across the globe once more. Whether or not we dip into recession again is hardly the main issue as for the average person it feels like we have never come out of it, but if banks do start to clam up again, more so than now, it will hurt.

The big difference this time is that Libor rates have barely moved. This is a good sign, as a rise in Libor can be seen as a key indication that something is very wrong.

So whilst it is not time to panic just yet, it is time for politicians’ to stop the “politics” – a big ask I know.

Meanwhile property prices in the UK continue to strengthen according to today’s report by Halifax, with bricks and mortar looking to be a somewhat safe haven in the current storm. Although banking shares are being battered once more, UK lenders still seem keen to lend and whilst mortgage rates are at an all time low, well, you can draw your own conclusions.

Now, where’s that Gordon Brown when you need him?

Granted there are alot of questions that remain unanswered and were meant to provoke some debate but anyway, here you go…

As perhaps the least auspicious member of the panel, being a mere mortgage broker rather than an economist or an eminant journalist, I can say with absolute confidence that no-one really knows what will happen next. The old adage that if you ask 10 different economists the same question you get 11 different answers has never been truer.

In reality there are just too many unknowns at present to predict with any real certainty other than good old fashioned gut instinct.

Will the Government cuts severely hold back any recovery or are they made out to be worse than they actually will be?

Have most people in the private sector at least decided that if they have not lost their jobs by now they should be fine?

Will the Monetary Policy Committee continue to ignore the sticky inflation issue for the good of the economy and keep interest rates lower for longer? Or will they bow to the pressure of fellow MPC member Andrew Sentance when he says that the MPC are risking “a loss of confidence and credibility” in dealing with the inflation issue and increase rates faster than many believed?

What will be the real effects of the hitherto untried policy of Quantitative Easing? Will this lead to higher inflation once the recovery really kicks in leading to ever higher interest rates?

Will the fact that banks need to start repaying back government aid lead to a further mortgage shortage which will drag house prices down further? Will this in turn cut off further funds for small businesses who will lead the recovery?

Or have the banks really just been “profiteering” recently and are now back in the best condition they have been in for many a year, ready to lend more at these profitable levels of interest no matter what they may say about Capital Adequacy requirements?

Whilst I do not pretend to have the answers, and whilst many economic theories have been thrown away over the past three years, I did learn 3 things in my remedial economics classes that I believe hold true and keep me positive.

1.    Supply and Demand – as far as property in the UK is concerned, with finite space and a lack of houses together with a nation obsessed with property, prices are set to recover.

2.    Everything moves in cycles – no matter how far the fall, there is always a recovery which in my mind has always been due at the beginning of 2012 and I see no reason for this to change. If this is the case it would seem that the next  “winners” in business or investment will be doing many of their deals in the coming months on the way up.

3.    Confidence is king – there is always a danger of talking ourselves into a double-dip as many in the US and in the media in the UK have been trying to do.  Whilst not appearing naive I do believe that we need to continue to keep positive.

Whilst the next 6 months may look grim, it is important for us to keep working hard, and I do believe we have passed through the hurricane and are experiencing the last of the storms.

You could hear the audible sighs of relief from all around the UK as the starting gun was officially sounded on what will no doubt be a close, fiercely fought and no doubt tetchy campaign. I still believe the 3 TV debates will be absolutely key to deciding who will form the next government.

Hopefully once all the uncertainty is out of the way things can start getting back to some semblance of normality and whilst there is a small matter of a few quid deficit to pay back, things tend to move forward once we know exactly what we are dealing with. It is the uncertainty that stifles everything.

In the meantime we can only try to get on with business as usual and whilst purchases may dip slightly before the election this could be replaced with the slowly returning remortgage market. After all, a new government may have new policies that mean interest rates have to rise and fixed rates are very competitive at present.

Competition amongst lenders is still growing nicely and hopefully this is set to continue, although some still harbour fears of a shortage of funds to lend out in the latter stages of the year. If this does begin to happen you can wave goodbye to the really attractive rates available now.

However, we live in hope that this can be averted and careful tranche management by a number of lenders should ensure a steady flow funds throughout the year. Of course, post-election anything can happen, but no government is going to want to see lending to individuals and businesses dry up even further than it already has.

It is interesting to see that Australia has raised it’s interest rates again as it tries to cool the pace of their recovery and keep a lid on the housing market and inflation.

The change in mood can already be felt, May will be here and gone before you know it, finally some decisive action can be taken, the World Cup is also around the corner and by heck it even feels like Spring today.

With the General Election looming these figures suggest that property purchases will continue to tail off until a new government is firmly in place and people know who, and what, they are dealing with.

While we may see a slight uplift due to stamp duty changes for first time buyers and people buying property above £1m wanting to move before the year is out, this is unlikely to occur until after the next Budget.

It’s encouraging to see that remortgages are up. More and more homeowners, who have been sitting on an SVR for some time, are starting to remortgage while rates are still as low as they are. In many cases, increased lender competition has pushed rates down to levels that are below many SVRs, so it makes sense to remortgage.

Borrowers are aware that the current low interest rate environment will not go on forever and that it may be good to remortgage now while they are still ahead.

However, activity picked up towards the end of January and into February so we expect to see stronger figures from February on until they begin to tail off again in the second half of the year.

January’s figures shouldn’t dampen the spirits as the mortgage market has got off to a flyer compared to this time last year, with hundreds of new products hitting the market and enquiry levels rising dramatically.

Many people have put their lives on hold for two years and increasingly seem to have decided that now is the time to make that move, or hedge against future rate rises.

As competition has seeped slowly back into the market, lenders are being forced to look beyond the 60% Loan-To-Value and below market, which is now saturated. They are starting to venture into higher LTVs and are even returning tentatively to the buy-to-let arena in search of higher margins.

But let’s not be under any illusions here, the mortgage market, like the economy, is still in the very early stages of recovery and could be set off course by any number of external factors. But in the meantime, now is the best time in a long time to take advantage of some highly competitive products.

The political soothsayers have been having a field day showing how we were the first into recession and the last out, and that the road ahead is going to be a frankly tortuous affair. Even Alistair Darling could not rule out the possibility of a dip back into the negative almost on the eve of the election.

The fact is that many economists have been caught a little short yet again with the apparent weakness of the recovery and there will no doubt be a lot more scratching of heads and gnashing of teeth in the days ahead.

So where does that leave us all? Well, I like to think I am a glass half full type of guy, (though my wife may disagree), and to be fair a 0.1% rise is a hell of a lot better than a 0.1% drop or a big fat 0! There is hope!

In fact, the International Monetary Fund, (IMF), has just raised its projection on how much the global economy will actually grow this year. It expects unemployment to stay roughly at the same levels, however they also stated that “a key risk is that a premature and incoherent exit from supportive policies may undermine global growth and its rebalancing”.

Meanwhile the World Economic Forum in Davos has begun which should provide an interesting boxing match between bankers and regulators, with many bankers railing against the Obama plans in the US already.

It is likely to be a heated few days, but everyone needs to understand that for the financial industry to move forward with confidence there needs to be a balance between financial institutions competitiveness and effective regulation.

Too much weight on either side could only add to the issues.

Meanwhile, the mortgage market seems to have a little spring in its step if early enquiry levels are anything to go by. More products are popping up left, right and centre and lenders are starting to get back to doing what they should be doing, lending.

I don’t expect too much to change leading up to the election, with the main issues potentially coming with a hard budget by the new Government, whatever the colour. Together with the end of support like the car scrappage scheme and Quantitative Easing, as well as measures to start cutting the deficit there are some undoubted tough times ahead.

Whilst we all want decisive action to get us out of this mess, as with any issue, there is a danger of being too decisive and over-correcting.

Whether we will indeed be limping for a generation remains to be seen, so sing us out Dr Robert, sing us out.

Most lenders seem to have got in on the act with some competitive tracker products and fixes as well as more higher loan-to-value products making an appearance.

This is of course good news for consumers and mortgage brokers alike as more choice comes back into the market. The one thing to watch, however, is the continuance of not just some strict underwriting policy, which is hard to really argue against, but some more “unfair” policies if that is the right word.

As usual it seems that the self-employed often bear the brunt of this, and one particular rule adopted by a couple of lenders is that of the effect a reduction in net profits have. For example, take an equity partner in a leading law or accountancy firm who earns a share of net profit. They earn six figures and the net profit of the main multinational firm runs into millions. Obviously we have just been through one mother of a crunch, just emerging from recession so many businesses have had a down turn in figures.

So, this firm has a slight downturn in net profits which means the partner’s share of equity reduces by no more than a few thousand, i.e. less than £10k. At least one lender stated they would not lend because net profits had reduced! Of course they have, is this not expected given the financial turmoil of the time?

It seems unfair to say to self-employed people if you have a good established business and you have just had a dip due to world events that you would not lend at all. Many employed people have agreed to take a cut in wages or bonuses to see themselves through and keep a job, but they are not told they cannot get a loan at all.

At least base it on the reduced figure, as you would on an employed person’s current salary, rather than having a broad stick approach of we can’t lend! Am I wrong to think that? Surely this downturn is all expected and does not mean that every self-employed persons business is going down the tube? Many of these people are safer bets than an employee who could be shed at any time, and I am not talking about those in a new business with no accounts, but long standing businesses that can show years of audited accounts!

I also understand why some lenders still seem to be carefully cherry picking those clients they want to lend to, but would rather see sensible reasons written into a policy rather than making more random excuses.

It is all very well to have tighter criteria, but there does need to be some common sense attached rather than a computer says no approach. It is a shame that some good people are struggling to take advantage of the low rates at present, whether trying to buy their dream home or trying to remortgage onto a fixed rate in the face of a potentially rising rate environment.

While no-one wants a return to the lax policies of the past when a passport and a smile got you a large mortgage loan, there is still room surely for a sensible middle ground.

I would say, however, that this does mean many more people seem to be coming to Professional Mortgage Brokers for proper advice after having had issues direct with lenders; so as they say, every cloud…

I guess that is why in much online writing and message boards many use the kind of annotation symbols I used to find rather annoying but have now embraced with glee, you know the ones; lol,
:-0)* (no idea on the last one, but you get the idea).

Anyway, the point is that because much of what I write, certainly in the banter with colleagues over company issues, is tongue in cheek, I think I am going to have to go further and start annotating my expressions after almost every line. Maybe I should do that with all my writing so people understand the tone in which I am addressing them.

In fact maybe all people in business should do that, and it could be very useful in our own industry. I would love to see new rate release emails from lenders with a bit of honest annotation, as well as some media releases.

Go on, try it

I know you may well be asking what is mortgage related about that, but not everything in this blog needs to be about that does it (genuinely furrowed brow)? I often think my best blogs are when someone says to me, “what the hell were you on yesterday?” (self-obsessed smirk as if anyone actually reads this).

But, talk about mortgages I shall (stifling yawn), after all that is ostensibly what I do!

There does seem to be a bit more get-up-and-go about the market at the moment with a plethora of new product releases, some of which fly in the face of recent SWAP rate increases, especially on a fixed rate basis. Lenders do seem to be a bit more relaxed about the future and are starting to concentrate on the core business of actually lending money again, (about bloody time to).

Whilst there is an undoubted return of a semblance of competition to the market, I still feel it is highly likely that the fixed products available in the first part of the year will be better than those available in the latter.

It was also a little bit sad to see the Abbey and Bradford & Bingley brands disappear into the ether of the past and it is a shame to lose something so quintessentially British , certainly where B&B were concerned.  However, Santander is a strong brand with a good reputation and I like what they have been doing, (slight crawl).

Anyway that’s progress folks, something we badly need and I am all for that.

QXRSUDQZ6FTK for all those wondering this is my Technorati claim reference I have to post into a blog – I don’t really know why either

One of the main areas of concern was not just the confusion that surrounds rates at present but the fact that some lenders have actually already started putting up their Standard Variable Rates, (SVR’s). To be fair this has generally been the smaller Building Society’s such as Mansfield and Cambridge but it does highlight the perils of staying on a lenders SVR.

These institutions have an issue. They claim that they need to do this in order to compete with state-assisted banks, as they have a delicate balancing act. Arguably it is more important at the moment for them to attract savers rather than lend money, and therefore they need to up their savings rate to attract business. Basic business sense means they can’t have high savings rates and low mortgage rates so mortgage rates need to increase.

As lenders seek to address their balance sheets it will not be surprising if more mainstream lenders also follow this trend. So again, it is important for consumers to look not just at the headline rate they may be getting now, but also to look at what the lenders variable rate is doing – at present we have SVR’s ranging from 2.5% to 6.45%! I would also tend to keep away from products discounted off the lenders SVR and stick with trackers.

There is however, some argument that in the medium to long-term the difference between the Bank Base and the lenders SVR will start to shrink again. In other words will we really still see SVR’s 5% higher than Bank Base once Bank Base is up at 4% again?

So, some economists believe we will still be at 0.5% by the end of the year whilst others see us at 2.5%. That is a big difference of opinion and I was also asked where I sat on that. To be honest I do believe we will see a change by the 3rd quarter of the year, and see a Bank Base of 1% to 1.5% by the end of the year.

I put a proviso on that however. Firstly that there is a decisive election outcome, a hung parliament helps no-one, and that there is no double dip recession.

Either way, even if competition does return to the mortgage market, and there is a lot of evidence to suggest it will further, it may well be worth reserving a product now at the very least as you may not be able to get such good products as you can now.