THE MORTGAGE THE MORTGAGE MARKETMARKET

John MaloneManaging Director PMS®

20082008

Gross lending £265bn (est), down £100bn on Gross lending £265bn (est), down £100bn on 2007, equates to £500 million less “proc fee” 2007, equates to £500 million less “proc fee” income – not including any associated income – not including any associated incomeincome

Specialist sector virtually non existent this Specialist sector virtually non existent this yearyear

Innovation / flexibility / no new entrants – Innovation / flexibility / no new entrants – opens door wider for High St, Prime, less opens door wider for High St, Prime, less innovative approachinnovative approach

Major Impact on Major Impact on Intermediary SectorIntermediary Sector

EffectsEffects

Reduced DistributionReduced Distribution Tranche ManagementTranche Management Packager market virtually wiped outPackager market virtually wiped out Less Intermediaries (Regulatory/Business)Less Intermediaries (Regulatory/Business) Products re-structuredProducts re-structured IncomeIncome

2009 - What will the 2009 - What will the “norm” look like?“norm” look like?

2002/7 – Abnormal2002/7 – Abnormal Pricing for volume, not riskPricing for volume, not risk ““Cheap” money fuelling the property Cheap” money fuelling the property

marketmarket The speculators dream!The speculators dream!

Pricing for riskPricing for risk

More cautious approachMore cautious approach

Property throughout UK likely to fall a Property throughout UK likely to fall a further 10%-20% (average), putting more further 10%-20% (average), putting more pressure on the remortgage marketpressure on the remortgage market

Gross lending £250bn?Gross lending £250bn?

This will be the Norm!!!This will be the Norm!!!

Advice even more importantAdvice even more important

Clients moving from 2 yr fixes to longer term Clients moving from 2 yr fixes to longer term mortgages – 5/10 yrmortgages – 5/10 yr

Purchase market 600 -700 thousand salesPurchase market 600 -700 thousand sales

Adding value to lenders (savings products)Adding value to lenders (savings products)

This will be the Norm!!!This will be the Norm!!!

Existing clients on SVR still unlikely to Existing clients on SVR still unlikely to remortgage as lack of liquidity will persist remortgage as lack of liquidity will persist throughout 2009throughout 2009

Availability of funds will elevate “advice” Availability of funds will elevate “advice” from intermediaries, leading to more “fee” from intermediaries, leading to more “fee” charging (also in keeping with the RDR)charging (also in keeping with the RDR)

Re-evaluating a club / facilitators worth, to Re-evaluating a club / facilitators worth, to both lender partners and supporting both lender partners and supporting intermediariesintermediaries

This will be the Norm!!!This will be the Norm!!!

First 3 months of 2008, Lenders / First 3 months of 2008, Lenders / Intermediaries / Government / Regulators, Intermediaries / Government / Regulators, were confused – no clear message.were confused – no clear message.

Going into 2009 the industry now Going into 2009 the industry now understands more the issues and understands more the issues and implications for all parts of the market, implications for all parts of the market, enabling a clearer message to clients and enabling a clearer message to clients and potential borrowerspotential borrowers

ConclusionConclusion