I could almost hear the champagne corks popping around the country on New Years Eve as brokers, lenders and networks alike celebrated a great year for the mortgage industry. I think the the partying is set to continue into 2007 too. With gross advances on a high and broker confidence matching it, I really can't see any reason why we won't be dancing in the street as the new year unfolds to reveal its delights.
Low interest rates, continued house price inflation and strong demand for buy to let are all set to continue. Some new trends are on the cards too. More European cross-border mortgage activity is likely. This will be fuelled by continued demand for overseas investment property as investors seek out new hot spots coupled with a desire for a second home in the sun.
On the down side, some experts predict a dampening of enthusiasm for bricks and mortar. The doom-mongers argue that houses are overvalued, that affordability will stifle first-time buyers due to imminent increases in the base rate and that the market cannot absorb these increases indefinitely. All fair points to be honest. But I expect the Monetary Policy Committee will be able manage these issues to ensure that no major correction is forced upon us. They have been able to manage demand and supply in the past and I see no reason why this should not continue. CML figures show repossessions at 8140 for the first half of 2006 compared to 5690 for the same period in 2005, which is a niggling worry as that is quite a large jump in just 12 months. But I’m going to remain optimistic about the prospects for 2007 despite one or two negatives raising their ugly heads.
I’m also going to be bullish about the prospects for the BTL sector this year. Although the growth in BTL has been phenomenal over the last decade or so, it has also proved resilient and the prospects would appear to be positive given that demand is likely to stay healthy.
While a house price crash is not on the cards, I do expect a more modest increase in house price inflation in 2007 compared to 2006 and generally speaking this is probably no bad thing as no one wants to see a boom and bust scenario again.
So, with the fundamental factors in place, I can’t see any reason why we can’t expect another cracker of a year as the mortgage sector continues to go from strength to strength.
Sally Laker is managing director of Mortgage Intelligence.
The views expressed are those of the author and not those of the company she represents.IFAonline
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