Almost half of brokers believe that, even after the initial distortion caused by the introduction of Home information packs (Hip) wears off, there will be a long-term decline in property transactions, research from the Intermediary Mortgage Lenders Association (IMLA) states
IMLA says intermediaries believe the introduction of Hips will lead to a decline in mortgage business as estate agents tie buyers into packages and sell them more mortgages.
Almost three-quarters (74%) of mortgage brokers expect home buyers to be tied into packages by estate agents which will mean estate agents and their advisers will sell more mortgages, giving less opportunity for independent mortgage advisers. And 35% of respondents anticipate they will generate less mortgage business as a result.
Most intermediaries (66%) anticipate a surge in property transactions prior to implementation date as sellers rush to secure a sale without a pack. And an even greater percentage (71%) expect transaction volumes to decline after Hips become law.
Lenders appear to be of a similar view saying they expect the two months before the introduction of Hips to see the number of transactions taking place rising by about 15%, while in the couple of months after the introduction they are forecast to decline by about 17%. While most see the distortion of the market as being temporary, as many as 47% of mortgage brokers expect there to be a long term reduction in sales.
Lenders themselves are sceptical about using the home condition report from the Hip in their valuation process. So far, a number of lenders have not yet made a final decision, but others have indicated to IMLA they would be relying on other techniques such as an automated valuation model or a separate appraisal by a surveyor. Only one lender said it would definitely use the home condition report.
Meanwhile 50% of brokers say they are more likely to recommend a lender who did accept a home condition report. IMLA says they tend to believe that if lenders do accept the report as part of their valuation process it will speed up the transaction, but also increase the cost. Overall, lenders have a very unfavourable opinion of Hips, with 68% describing them as a poor or a bad idea, and just 16% sayinig they are a good idea, reflecting widespread concern about the introduction of the packs.
Lenders’ concerns over Hips focus on two principal aspects – speed of transactions and cost. While one of the government’s stated aims in introducing Hips is to speed up transactions, over half of lenders, says IMLA, think Hips will make no difference to the time it takes for a housing transaction to be completed and 42% think it will be slower or much slower.
IMLA members remain mostly sceptical about the chances of Hips being implemented as planned by June 2007, with 79% expressing doubts. In fact, 21% of them say there is ‘no chance’ of Hips being introduced on schedule and 58% were ‘not very confident’.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Matthew West on 020 7484 9893 or email [email protected].IFAonline
DB and a lack of alignment
Encouraging better use of tech
Win one of three £20 Amazon vouchers
Vanguard's multi-asset range