02 October, 2014
Against a background of further record breaking in terms of post credit crunch second charge lending, we are into traditionally the most productive period of the year in the long run up to Christmas. Latest figures show a volume increase of 22% when compared to the same period last year and in fact in terms of yield to date the market is 31% ahead.
This is all good news but I think we need to remember that although lending is going up, it is being spread across a growing number of lenders. What is interesting for observers is how those volumes are going to be split in the runup to 2015 and beyond. With new lenders joining the sector in 2015, it is debatable on current performance whether the market is actually growing fast enough to accommodate the supply side. Only a few years ago, that problem would have seemed laughable, as there was a complete reversal of where we find ourselves now. Can there be too many lenders?
At this stage in 2014, advisers are already spoilt for choice. With headline rates at their lowest level and a wide product range from multiple lenders, it is hard to see where newcomers are going to pitch their offerings to build significant traction with intermediaries
One of the main problems for the industry is that despite the advantage of becoming a really serious alternative to remortgaging, the potential benefit to the sector of greater volumes has yet to be felt in terms of seeing volumes increase at a rate that will keep new lenders wishing to enter. All growth is to be welcomed and we are having a record year, so no complaints from me. But looking at the sector as a whole, competition for business is at its tightest and rates cannot really go much further. Easing criteria further is really no longer an option and in fact with MMR and closer scrutiny of affordability, growth will continue to come but that next leap forward might be more of a hop.