With another year over and a new one begun it’s the time we all look ahead at what 2013 may hold, and for me that includes the housing and mortgage market. As always, I don’t like to predict which way house prices will go because it’s too hard to tell, and the market over the last ten years hasn’t acted how most pundits have expected. Having recently survived another end of the world day, I feel even less interested in making or reading about predictions which do not have any solid foundations. What you can look at are the facts, trends in statistics, and changing law and regulation which could result in market movements.
What has happened recently, is that the FSA have almost finalised the rules for the mortgage market review. These rules are aimed at making sure borrowers receive advice when taking out a mortgage, rather than just being guided to a product. The rules are also a move away from old in that, rather than the suitability of a mortgage was based on if a borrower could afford it at that time, it will now be more focused on the best way to ensure the mortgage is cleared before retirement, and pose as little risk to the borrower and lender as reasonably possible.
Because of this, I do predict that banks and building societies will be trying to encourage borrowers to apply through mortgage brokers. Because of the nature of mortgage brokers, they are much more able to tailor a solution to the borrower. Imagine if you went to look for a new suit or a new dress, and were restricted to just one shop, you might come out with something that didn’t fit. Whereas if you could go to every shop, you could find the one that’s right for you, fits perfectly, and most importantly is within your budget. In the past, the rules have allowed sales of mortgages which are only the most suitable available. When the new rules come into place, lenders will no longer be allowed to offer unsuitable products and they will be obliged to point the borrower in the direction of a broker who is able to cater for all their needs.
For me, the way for us to move forward has never been about a battle between lenders and mortgage brokers, but about our ability to work together and create a system for borrowers which protects, guides and matches their needs to the best solution possible. Now, the new rules should reignite the relationship between lenders and broker.
The mortgage market review rules don’t come into force until 26th April 2014, which may seem a long way off, but lenders already have their foot on the brakes. They are making the changes slowly so that they can seamlessly make the transition into the new landscape of the market, and 2013 will see a big move towards promoting products to be sold via intermediaries rather than the banks branches.
Kieron Bassett Financial Services has two Independent Financial Advisers who specialise in mortgages and investment advice. Contact us on (01524) 832057, via e-mail, info@kieronbassett.com, or visit www.kieronbassett.com.
Jason Hinde DipPFS
7th January 2013
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