Ray Bohringer Blog...

The Year of the Dragon has now begun, so what can agents expect from the mortgage market and mortgage lenders?

While the Dragon in Chinese culture stands for prosperity for the year, and indeed for anybody born in that year, I do not see any likelihood of a Chinese influence in the UK market, I’m afraid.

Bank of China still has its doors firmly closed when it comes to lending in the UK mortgage market. Who can blame them? The previous attempts have proved – mainly due to timing – to be disastrous. That, however, should not put new players off. I, for one, think there will be several launches this year, and I’ll tell you why.

For my money, growth will be in several areas, including:

Buy-to-let:This will be a growth area as lenders compete for what is excellent business at very reasonable margins. New players will take advantage by offering more realistic rent requirements in order to compete with the high street banks. Did you know Lloyds pitch in at 180% of rental income! How alarmist: talk about price yourself out of the market.

MMR rules on affordability:Yes, I mean it. Don’t look so shocked. The fact is, new rules will allow the thousands of mortgage prisoners to escape. New rules will allow mortgagors to change their mortgage, pound for pound, without having to prove income. This, of course, will be subject to a good track record. Whilst this will mainly affect the remortgage market, it will have an impact on some sales where buyers are not necessarily trading up. I also think it will be the start of more sensible rules on affordability generally, which will be excellent news.

Non-conforming market:There, I said it! And I didn’t get struck down by lightning for being a naughty boy. Fact is, whether the FSA likes it or not, more and more lenders are ‘taking a view’. Not a full panoramic one but a better-than-blinkered look at inquiries. You won’t find it in their lending manuals, but if you know the market, you know where to look. The problem, of course, is that most brokers are scared of their own shadow when it comes to being ‘inventive’ for fear of spending time at Her Majesty’s for fraud. But helping a client who has had difficulty in very difficult economic times should be applauded.

90% lending:It’s back, and it will improve significantly, with several lenders already showing an interest at very competitive rates. I should also say that most high street lenders are dropping their very high and unreasonable fees. Yes, the FSA has seen right through that one at last. Very good news if it gets first-time buyers back in the game.

Well, that’s it from me on the prospects in the year of the Dragon.

Not all doom and gloom, is it?

Ray Bohringer is partner at Obligo, which offers a mortgage proposition to estate agents.