Doom and gloom? It’s not the way I see it, says Eddie Goldsmith, senior partner at Goldsmith Williams
If you base your outlook for 2010 on the British Bankers’ Association’s most recent figures, then your prognosis is going to be pretty gloomy. House purchase approvals fell by 10,000 in January to 35,083, which is also lower than the 42,582 average over the previous six months. No signs of recovery just yet, then.
Well, that’s not quite as I see it. Why? Because at Goldsmith Williams we have a telephone based account management team which makes contact with several hundred brokers every week and they are reporting a definite shift in broker attitudes and optimism about the state of the market.
According to our account managers, brokers are starting to see the first tentative signs of recovery. Now I do appreciate that one swallow doesn’t make a summer, but our own business figures at Goldsmith Williams corroborates this feedback. We have seen the number of remortgage instructions being submitted by intermediaries increase by nearly a third since mid January this year.
So what’s going on? Is Goldsmith Williams operating in its own little market bubble, or are there other forces at play?
Actually, I suspect the reason for the disparity between the BBA figures and Goldsmith Williams’ own experience can be easily explained.
January has never been a terribly good month for mortgage lending and this year’s dip has probably been exaggerated by a combination of the Stamp Duty holiday coming to an end in December and the appalling weather in January, which dampened the enthusiasm of potential house buyers. When these factors have worked their way through the system, there is every reason to believe that February and March should be stronger months – which is precisely what our new business statistics at Goldsmith Williams are telling us.
What’s more, to bolster that sense of optimism, we have seen more new products being launched by lenders, lenders adjusting criteria to make them more accommodating and loan to valuation ratios starting to creep upwards. The remortgage market has also started to come back which, traditionally, has been brokers’ bread and butter business, which has to be good news and the number of house purchase enquiries are also increasing, according to a number of estate agents.
There are even strong rumours starting to circulate that we’re about to see the launch of a number of new lenders, some of whom will be intermediary-only businesses. This will not only increase choice for both brokers and their clients, but will also increase competition which will hopefully have a direct impact on product pricing and availability.
All of which bodes well for the future, but let’s not get carried away too soon and expect the market to be booming by mid-summer. I’m under no illusion that any recovery will be slow and may even stutter before it gets fully under-way. We’ve also got a general election looming on the horizon and George Osborne has already made it clear that if he becomes Chancellor there will be no turning away from the need to address the growing national deficit. Which means public spending rather than tax cuts hardly an ideal way to stimulate the housing market!
Nonetheless, there are far more reasons to be positive about 2010 and beyond, than there were this time last year. It’s going to remain a challenging market and I think we’ve all accepted the fact that there will be no immediate return to the boom times of 2006 and early 2007, but at least we appear to be moving out of the ‘batten down the hatches’ phase and into the ‘plan for recovery’ phase.
Let’s hope that the next few months continue this positive trend.