Mortgage Market Comment by TMM


Market Comment

February 2013.

Mortgage Market Update.

Having endured an Arctic inspired cold spell, are we about to see the UK skid back into recession?

In December 2010, the Big Freeze caused a contraction of the economy, according to the Office for National Statistics. The economy shrank by 0.5% in the last three months of 2010. Without the huge snowfall, growth would have remained flat, the ONS said.

Peter Spencer, chief economic adviser to the Ernst & Young Item Club, a forecasting group, believes the UK is “sliding towards” a triple dip, and that the bad weather will be the deciding factor. “This weather is significant enough to have economic effects,” he said. “If the fourth-quarter figures are negative, and if this very bad weather lasts, then the first quarter will also be negative. We will end up with a triple dip.”

Figures released last month showed that the UK economy contracted by 0.3% in the last quarter of 2012 fuelling fears that Britain could re-enter recession. Although the previous quarter was buoyed by the Olympics and registered a rise in GDP of 0.9%, the drop in the last quarter of 2012 was largely due to a drop in mining and quarrying, after maintenance delays at the UK’s largest North Sea oil field, according to the Office for National Statistics.

However, there are also a range of indicators which point to firms’ growing confidence, a steadier housing market, and employers’ readiness to hire, show that the UK is returning to growth and should avoid a triple-dip recession. Sentiment in the private sector is consistent with the economy growing by 0.4pc in the current quarter, according to the latest quarterly business confidence monitor from ICAEW/Grant Thornton. Their index has climbed over the last three months to a positive reading of 12.8 from 4.2 - where anything over zero shows an improvement in business confidence - signalling sentiment is at its highest in almost two years.

However, it is felt that the British economy is set for slower growth in 2013 and next year than thought only three months ago but it will probably skirt a triple-dip recession, a leading economic think-tank said on Tuesday.

The economy will grow by 0.7 percent in 2013 as it grinds through the slowest recovery from recession in the past 100 years, the National Institute of Economic and Social Research (NIESR) estimated in a quarterly report.

That was lower than its previous forecast, made in November, for growth of 1.1 percent this year.

In 2014, Britain’s economy would probably grow by 1.5 percent, lower than November’s forecast of 1.7 percent. NIESR’s forecasts were also weaker than those used by Britain’s Conservative-led government. It expects the economy to expand by 1.2 percent this year and by 2 percent in 2014.

The Bank of England’s pump-priming of the mortgage market fuelled some New Year cheer for homeowners today as Nationwide said average prices rose 0.5% in January. The lender put the improvement down to the Bank’s Funding for Lending scheme easing funding conditions but warned that further momentum would also depend on an improving economy.

Commenting on the figures, Robert Gardner, Nationwide’s Chief Economist, said: “UK house prices increased by 0.5% in January, though prices were unchanged compared with January 2012. While activity in the housing market remains muted by historic standards, there have been tentative signs of a pickup in activity in recent months. The Funding for Lending Scheme has achieved some success in bringing down mortgage rates, with some signs of a pickup in lending activity. Hopefully, the momentum will continue to build in the months ahead, though much will depend on whether the wider economic environment improves. Progress is likely to be relatively slow on that front if recent trends are any guide, with the UK economy shrinking for the fourth time in five quarters in Q4 2012.”

Meanwhile new research continued the more positive mood music from the housing sector. Housebuilder Barratt’s home buyers panel, representing close to 2,300 people, showed the number of people reporting difficulties getting a mortgage has halved compared to a year ago – 15pc against 30pc – as has the proportion experiencing difficulties selling their own home, now down to 17pc.

Mortgage lending in the UK in 2012 was little changed on 2011 but ended the year in more “robust” form, a lenders’ group has said. Gross UK mortgage lending reached an estimated £11.7bn in December, pushing the total for the year to £143bn. This was £2bn higher than the previous year, according to the Council of Mortgage Lenders (CML).

“We are more positive about the UK housing market and wider economy than a year ago, despite economic headwinds and downside risks,” said CML chief economist Bob Pannell. “House purchase activity was robust in the fourth quarter, on the back of better mortgage availability and pricing, and we expect this to continue over the coming months.”

Although lending in December 2012 was slightly lower than the same month a year earlier, the CML forecasts that gross lending will reach £156bn in 2013.

The Bank of England’s own Trends in Lending figures confirmed that UK mortgage approvals for house purchase and remortgaging were higher in the three months to November than the previous three months. First-time buyers were among those who have created more demand.

So, what action should borrowers be taking presently. Well, with a number of lenders having raised their Standard Variable rates over the last few months, there is absolutely no sense in sitting on your lenders SVR, especially with the competitive Tracker and Fixed rates, such as a five year fixed rates at below 3%, currently available. However with the extremely vigilant underwriting taking place currently now is also not the time to be dabbling with lenders that you are not familiar with. Now, more than ever, the role of an experienced mortgage broker is extremely important in being able to identify lenders that are not only offering competitive interest rates but those that will actually lend.

To discuss your mortgage and the different options available to you please call one of the Tyler Mortgage Management Account Managers.

Our advisors with an average of 20 years or more in the Mortgage Market can help guide you to the most appropriate solutions for your next mortgage and their wealth of experience should help ease the way for you to find the package that is most suitable for you.

You may have to pay an early repayment charge to your existing lender if you remortgage.

Your home may be repossessed if you do not keep up repayments on your mortgage.

A typical fee for arranging your mortgage is 1.5% of the loan amount.

For more personalised comment and for advice about your own mortgage requirements do please pick up the phone and call one of our team on 020 7930 7242 or email one of us having read our profiles on the “about TMM” pages on this site.

Simon Tyler, 10th February 2013.



Client Comments

“I have known Simon for 30 years. He is a thoroughly dedicated professional, and I can guarantee for any prospective client, that you will not be disappointed. He has assisted me with some tricky requests for mortgage assistance and without his help, I would never have been able to achieve my goals. I trust this man wholeheartedly, and suggest that you do the same.”
Tony Eager
International Manager – Security Industry.

“I have dealt with Simon since 1988 and helped develop IT solutions for his companies as well as receiving excellent personal mortgage advice from him as he built up his companies. Simon is unquestionably and honest and genuine person to both work with as a supplier and to receive unbiased advice from.”
Anthony Roy
Technical Director and CEO, Risk Free UK LTD.

“Simon is an expert in his field. He has provided me with sensible, effective advice on mortgages on numerous occasions.” .
Cary Zitcer
Business Owner in the Security Industry. Dealt with Simon since 1980.

“Over the years Simon has advised us on many occasions with regard to our mortgage requirements. Simon stands out from the crowd in this industry for his sheer depth of knowledge, long established relationships with mortgage providers, and general gravitas. Despite several aborted property purchases, Simon has always come up with the goods when we most needed it, and most recently, he assisted us in the purchase of what I can confidently say is my dream home, against stiff competition. Simon is also a great industry commentator.”
Alison Cork
Journalist and TV Presenter.

“I have worked with Simon for over 20 years and he has always come up with good solutions and products that are not generally available.”
Jonathan Lewis

“If you're buying a new home or ever need to borrow money cheaply and reliably, through a new mortgage, a bank loan or any other financial instrument, Simon has always been one of the best experts – and commentators.”
Journalist and Broadcaster.



Your home may be repossessed if you do not keep up repayments on your mortgage.

To discuss your current or future mortgage requirements please call 020 7930 7242.

A typical fee for arranging your mortgage is 1.5% of the loan amount.