December 18th, 2014
During the Easter period of 2014 the return of valuation delays became a significant issue for the house buying process. The problem was first highlighted in the summer of 2013, when the sudden spike in purchasing activity surprised many industry insiders. Surveying firms struggled to deal with the demand, mainly due to a reduction in qualified surveying staff being available as firms reduced their work forces, post-credit crunch, in order to balance the books.
The issue returned to the market earlier this year, as larger firms Colleys and e.surv, two of the biggest to supply surveying services to UK lenders, were recorded as quoting up to 4-6 week delays from the point of instruction for a survey to be completed. When this issue was combined with a dip in underwriting processes, as lenders attempted to integrate the Financial Conduct Authorities Mortgage Market Review requirements, mortgage application timescales significantly impacted property purchase completions.
While the MMR process was seen earlier in the year as a catalyst for a poor mortgage market performance in 2014, experts now believe that it has had very little impact on the sector. As lenders have continued to capitalise on a low central Bank Base Rate, low fixed rate options have helped lenders to recoup business over the past quarter of the year.
However, surveying firms are clearly concerned that with the potential for rate increases in the New Year, and with lenders fully versed on the FCA’s expectation for consistent underwriting practises, the belief for many in the market is that 2015 could be a busy year.
Richard Sexton, the business development director for e.surv, was quoted this week stating: “[There are] perhaps 300 more valuers active compared to 12 months ago as a consequence of graduate training programmes and other activities. Turnaround times are sub-three days across the country, including London and the South-east.
“That is not to say that the problem has been dealt with; our calculations suggest there is perhaps 15 per cent spare capacity in the market. That means if gross lending climbs to over £21.5bn in a month, the issue may rear its head once again.”
The recent move by the Government to reform the stamp duty process in the UK has been greeted as a mixed blessing for buyers, with any expected saving likely to be eroded by increases to property values. But the expectation is that the move will help to bolster business numbers in 2015, with many first time buyers likely to seize the opportunity to purchase a property.
Jennifer Ward, a senior mortgage broker for Contractor Mortgages Made Easy, said: “Days after the announcement to alter the stamp duty process was made, we saw a significant spike in interest across the market. Considering the time of year, this bodes well for the housing sector in 2015, as interest rates are likely to remain low for much of the first two quarters of the year.
“The only concern, as was felt in 2013 and earlier this year, is that a lack of qualified surveyors will stretch mortgage processing times. It is important that purchasers are aware that the market naturally becomes busier in the spring to summer months, so it is important to act sooner rather than later to prevent delays.”
Article By: Simon Butler, Senior Mortgage Consultant at Contractor Mortgages Made Easy
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