Predictions for 2019

04 January 2019

Richard Pike, Phoebus Software sales and marketing director

A Brexit deal or a no deal, another referendum and even a potential Tory leadership challenge or a general election will all have varying effects on our industry this year. 

One area that has lost focus is housing. The Budget was understandably markedly restrained, but once again, announcements to solve the housing stock crisis didn’t go far enough. The buy-to-let market is now stagnant following the implementation of tax changes, and many private landlords are now selling to utilise accrued equity. Conversely, an area that will increase in 2019 I believe will be “build to rent” market and this will naturally lead to an expansion in development finance lending. This could also increase the amount of bridging finance.  

The later life lending market continues to become more mainstream and accepted by both consumers and intermediaries. It is expected that this market will have topped £4 billion when the 2018 end of year figures come in, up 25% from £3bn in 2017; with many new funders looking to enter the market, expect some very positive growth in the equity release sector again in 2019.

Mortgage funding will remain a focus in 2019. There will be continued launches of challenger banks taking deposits to fund lending products, and I see some of these being specialist in areas such as development finance and lending to SMEs.

I also expect more securitisation activity in 2019, albeit the European market could be affected, dependant on how Brexit finally pans out. There is a possibility Sterling will be negatively affected against the Euro which could have a knock-on effect   in the short term, but any USD securitisations should remain relatively unaffected as market analysts in general are not expecting Brexit to affect the pound against the US dollar.   

From a technology perspective, there will be continued launches of new platforms to enable the mortgage and banking processes to become more efficient. Areas such as open banking will continue to be standardised, although consumer take up is still questionable at this time. The growth in areas such as securitisation and development finance will also mean lenders will look at software providers that can offer solutions in these areas.

A big positive from 2018 was the fact interest rates didn’t rise as many predicted, and this has kept repossessions at very low levels. Although there will be more repossessions next year, forbearance will remain a market requirement and as interest rates will not dramatically increase. Borrowers should be able to remain in their homes until every opportunity has been given to them to get themselves back on their feet.    

 

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