Frank Eve is managing director of Frank Eve Consulting
I have a message for all mortgage brokers, in the words of Harold Macmillan, the Conservative Prime Minister of the 1960's or Super Mac as he became known, “You have never had it so good!”
The Government has decided that the only way to drive growth and win the next election is through the housing market. George Osborne will boost growth through increased housing construction and he hopes to win votes by helping more consumers onto the housing ladder. Conservative governments have done this before and he has few other options at present. All the factors for growth in the housing and mortgage markets are being put in place and as a result mortgage brokers may need to gear up to take advantage of a very good 2015 for mortgage lending.
Firstly there is the Funding for Lending scheme that is having an impact by lowering mortgage rates and increasing volumes in the market. This scheme will be extended past its current expiry date of the end of this year, although some tailoring may be required. So funding in 2015 should not be an issue.
The next major factor is a £12 billion scheme announced in the Budget to guarantee up to £130 billion of mortgages to further kick start the housing market. The Help to Buy scheme could benefit up to 570,000 borrowers over the next three years starting from January 2015. The scheme will be open to first time buyers and anyone with a small deposit. This should encourage lenders to lower rates even further for borrowers with small deposits. Added to the New Buy scheme already in force this could inject new momentum into the housing market in 2015.
The final piece of the jigsaw will be Mr Carney coming in as our new Governor of The Bank of England. He has a history of boosting property prices in Canada and if he runs true to form he will announce his new policy at the Bank as “Flexible inflation targeting”, i.e. no inflation targeting and he will also announce a set time for interest rates to stay low. This may be three to five years from 2015 and would provide the final safe guard for borrowers to be sure they will not face higher rates on their mortgages for some considerable time.
This will give the market all the ingredients it needs in 2015, low stable interest rates, plenty of funding, a guarantee to protect lenders and an incentive for borrowers to max up and move on!
Brokers gear up! “You have never had it so good”.
If you want more information on “Super Mac” follow the link