Mortgage lending to hit a new low this year, says MAB boss

Mortgage lending this year will fall to a new low, the head of Mortgage Advice Bureau has said. CEO Peter Brodnicki estimates that the total mortgage market in 2012 will be £125bn.

He said: “We have not been that low before, but with Santander announcing that it will be lending £10bn less this year, it is hard to see that anyone will pick up the slack, and indeed some other lenders could follow suit.

“The next eight months will, in lending terms, be extremely hard.”

Brodnicki’s estimate compares with £135bn last year, and £360bn at the height of the boom.

He said that a major problem had been created by the ending of the Stamp Duty holiday for first-time buyers in March: “The problem was that for the first three months of the year, both brokers and lenders were going over target. In fact, all that had happened was that deals had been brought forward.

“On top of that, we have the challenges of interest-only mortgages dying the death and lenders demanding high deposits. Whole chunks of people who were previously able to buy property will never be able to do so again.”

Further hurdles are the prospect of more regulation, plus the inevitable disruption that will be caused by the Jubilee and Olympics. He also describes down-valuing by surveyors as ‘a constant challenge’.

“It affects some types of properties more than others, and some areas more than others. Down-valuing is also more obvious with certain lenders,” he says.

Brodnicki forecasts that lending next year will pick back up to last year’s level of £135bn. But will it ever go back to what it was? He doesn’t think so. “Whenever I go to a meeting, we always talk about a recovery, or whether what we have now is the norm. My feeling is that the market will pick back up to £180bn to £190bn, but not back up to £360bn.”

Despite the slow mortgage market, Mortgage Advice Bureau made record profits last year and has expanded significantly.

Last August, it operated through 650 estate agency branches – ahead of the pre-crash high of 500 branches. Today, thanks to two major deals, it now has a presence in 850 estate agency offices.

The first deal was with Countrywide and is a 50:50 joint venture with Capital Private Finance, by which MAB handles the mortgage requirements for Countrywide’s upmarket brands – Hamptons, John D Wood, Sotheby’s International Realty and Faron Sutaria. That deal brought 120 branches into the MAB network.

The second deal was the purchase of Mortgage Talk, which added some more estate agency branches, but also gave MAB entry into the new-build sector.

With mainstream mortgage lending predicted to be low, Brodnicki anticipates concentrating activity on the buy-to-let and new-build markets.

Growth is continuing, with MAB expanding at a healthy rate. “Each week, we are adding more estate agency branches,” says Brodnicki.

How does he square MAB’s success with the market slowdown? Estate agents “need to get their mortgages away”, he says, and MAB has a strong track record.

Some agents are finding that their own, possibly long-standing, mortgage arrangements are faltering as lenders become pickier as to the quality of their network. “Lenders no longer just look at volume but at other aspects of performance, and will, for example, give only some brokers access to certain funds,” says Brodnicki.  

There is also, of course, the small matter of an incentive for agents to earn money from being able to offer a MAB presence – important in today’s slow housing market.

He also thinks that being able to offer complete transparency, whereby agents can track a mortgage deal from the first appointment with a MAB broker all the way through to completion, is a real plus.

So, even with the next eight months of mortgage doldrums, does he think that MAB will continue to buck the general trend?

“I will be surprised if we do not have 1,000 branches in a year’s time,” says Brodnicki.