Article | November 2006 | by Duncan Young
2007 Outlook
I believe that the course of house prices and interest rates in 2007 will be heavily influenced by buy-to-let investors. There has been a surge of interest in the second half of 2006 which has had a huge influence on house prices. But with interest costs exceeding rental returns and more equity needed to finance purchases will demand continue? – if it does then house prices and interest rates are headed higher, if not then the reverse is true.
Within the equity release market demand will continue to grow. This will be helped by a raft of initiatives from the likes of PMS ably assisted by AMI and the PFS, which has a new faculty of retirement and care. One technical change in FSA returns will see lifetime mortgage rates rise by around 0.5% and this could trigger some smaller players to re-evaluate their commitment to the market place.
Also FSA regulation of reversions will come in April and will pass with hardly a murmur – all the product providers have had ages to get ready.
On the media front fees, PPI and TCF will continue to dominate as journalists look for mis-selling copy, but thankfully equity release will, for once, be below the parapet and so will be allowed to offer considerable benefits to the consumer.
SHIP will look for a new role under its new chairman and it will be interesting to see if it is successful in re-inventing itself now that much of what it set out to achieve has been accomplished with all equity releases being regulated.