2012: The Good, The Bad or The Ugly?

Published: 06/01/2012

At the start of a new year, people tend to do two things: look back on the previous 12 months and take stock of what they’ve done and achieved and look forward to what the next year potentially has in store.

It is fair to say 2011 was a bit of a mixed bag – some bits good, some bad and some downright ugly. One of the ugliest was that of the first time buyer.

There weren’t many times when the plight of the first time buyer didn’t make the headlines. Solutions were desperately sought - from FirstBuy to Mates Mortgages – with some ultimately more successful than others. There was even the return of the 100 per cent loan-to-value (LTV) mortgage.

While first time buyers continued to feel the wrath of the harsh market, buy-to-let began to find its feet again. Rents hit record highs month after month and, in July, average rents for England and Wales smashed the £700 mark while average London rents exceeded £1000 a month. High tenant demand largely contributed to these increased rents while the historically low base rate allowed landlords to lock in a low rate remortgage deal.

Like buy-to-let, equity release was another saving grace for the property industry. Poor pensions, debt, depreciating savings and children in need all contributed to an increase in equity release activity; Q3 seeing a 12 per cent year-on-year increase. The market is looking so promising that 55 per cent of brokers are considering getting in on the action in the coming 12 months.

And with mention of 2012, our vision spins forward. Will the New Year, an Olympic year, be a winning one for those in the property game? Sadly not if the members of the Intermediary Mortgage Lenders Association (IMLA) are to be believed.

IMLA members foresee challenging times ahead, predicting gross mortgage lending will fail to surpass £130bn, resulting in a £8bn lost year-on-year. They are also expecting unemployment levels to remain high with the potential of further increase.

Peter Williams is the IMLA Executive Director:

“The survey results may look negative but represent a realistic outlook for the year ahead and remind us that we are still in very challenging times for the economy.

“The mortgage market remains very limited, which is why intermediaries can play such an important role to help inform consumers about the best products available and what is right for them.

“Matching lenders and products to consumers is crucial to ensure sustainable lending and improve the market.

“Council of Mortgage Lenders figures show that intermediaries accounted for nearly two-thirds of sales – 64% of first-time buyer loans, 57% of remortgage loans and 52% of home mover loans – during the third quarter of 2011.”¹

But alas without that proverbial crystal ball, only time will tell if these predictions come true. One thing is certain however as Clint "Blondie" Eastwood pointed out: "We're going to have to earn it!"

¹Introducer Today (Jan 2012)

Content correct at time of publication

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