Wednesday, 28 October 2009
The FSAs recent discussion paper on the future shape of the UK mortgage market is a sobering read.Restrictions on self cert lending and fast-track loans alongside an increased focus on "toxic" combinations of risk and on granular checks on affordability are a predictable regulatory reaction to the perceived shortcomings of lenders and intermediaries. Lets not be coy; a review is necessary. There have been significant failures in the mortgage market, an absence of risk-pricing and over-supply of easy credit.A review is needed to understand what happened and to make sure the big mistakes are not repeated in future. BUT the UK mortgage market was not uniformly flawed nor was it full of failed business models. The market has been innovative, competitive and effective in helping many people buy their own home. The review is timely but it needs to take a proportionate and measured view of the mortgage market, so that a healthy baby is not hastily despatched with the bathwater. My hope would be that we all learn lessons from the events of the past 2 years but that we also acknowledge the value in the choice, competition and diversity in the UK mortgage market so that a refreshed market emerges rather than the unintended consequence of restricted customer access to suitably tailored products.
Monday, 5 October 2009
Whilst few people are claiming that the UK economy is on an inevitable pathway toward sustained recovery , the FTSE index has given us plenty recent signs of optimism. The FTSE 100 index has actually risen by just over 50% since its low level in March this year and in the most recently reported quarterly growth figures investors have seen gains of over 20% in just 3 months, the best quarterly performance in the FTSEs 25 year history! Of course the damage done to stock markets around the world by the credit crunch and recessionary conditions means that the base point of comparison is a low one, but that doesn't alter the fact that recent investors in FTSE stocks have had a very fine 2009. This compares very starkly with the historically low interest rates on traditional savings accounts.Of course the risks and rewards are different when you compare a building society account with a FTSE related product and that is why anyone contemplating an investment in the latter should undertake a full fact-find with an Independent Financial Adviser(IFA) to establish the most suitable portfolio based on their risk appetite. But clearly our customers will want help in weighing up all their options and so I'm proud that The Hanley is one of only a handful of building societies with its own subsidiary IFA business (Hanley Financial Services) so that our members and customers can get exactly that sort of professional,trustworthy advice. Retail savings from high street providers can co-exist with FTSE linked investments.......the link is the customer need and the provision of independent financial advice.