The last few months have seen signs that the large mortgage market in the UK is gradually beginning to recover. Government initiatives and falling interest rates have led to a spike in mortgage lending, with the most recent figures from the Council of Mortgage Lenders revealing that May saw the highest level of mortgage lending since October 2008.
A total of £14.7 billion of mortgages were agreed in May, up 21 per cent from the £12.2 billion lent in April. And, it’s the mortgage brokers role which is increasingly playing a large part in financial recovery. Here, we look at the large mortgage market and the vital role that mortgage advisers have to play in the months ahead.
Brokers well placed to handle increase in mortgage activity
May was the best month for mortgage lending since October 2008 and experts believe there is more to come. Mortgage Strategy reports that ‘the growth in lending is expected to continue for the next few months as high volumes of applications work through the system’ while Council of Mortgage Lenders figures indicate that the gross mortgage market in 2013 will increase by 10 per cent on the 2012 total lending figure.
“Brokers are extremely well placed to handle this increase in mortgage activity,” says Islay Robinson, CEO of London mortgage advisor Enness Private Clients. “It’s still nowhere near as easy to secure a large mortgage as it was in the mid to late 2000s and so high net worth mortgage clients will still benefit from the advice and contacts of a broker.”
Mortgage Strategy adds that ‘remortgage, buy-to-let and new homes lending, which has been bolstered by the Government’s Help to Buy scheme, has risen significantly with brokers dominating these markets.’
“With interest rates having fallen to record lows it’s also a great opportunity for mortgage brokers to help their high value mortgage clients to secure a better deal,” adds Mr Robinson, the large mortgage expert. “Brokers tend to take a large share of the remortgage market and so, as that sector begins to grow, more and more business will be done via an advisor and less via a lender’s branch network.”
Some industry experts believe that mortgages arranged through brokers will increase by 10-20 per cent in 2013 and overall bank branch volumes will fall. Broker applications are also likely to increase once new mortgage rules come into force in early 2014.
Mr Robinson explains: “The recent Mortgage Market Review stated that the vast majority of mortgages will be arranged on an ‘advised’ basis from 2014. This means that high value mortgage borrowers will effectively have the option of advice from a broker or advice from a member of a lender’s own staff. This means that brokers are well placed to be the ones to provide the impartial advice that borrowers will need.”
Writing in Mortgage Strategy, market expert Nigel Stockton believes that lenders are becoming more confident about the economic and housing market conditions and that the extension of Help-to-Buy scheme will provide impetus to an already growing gross mortgage market.
He adds: “Figures for specialist second charge and secured mortgages look strong from what I have read and this is perhaps evidence that the high net worth mortgage and remortgage sector is also growing.”