Mortgage Brokers...

How will Home Information Packs (Hips) affect you?

From the 1st June 2007 it will be a finable offence to market a property for sale without first having a Home Information Pack (HIP) in place.

There is a lot of talk as to how HIPs will affect Mortgage Brokers, the main but not the only issues are examined below.
 
Will Mortgage Brokers be providing HIPs for their clients?

The likelihood is that most of the Home Information Packs provided will come by the way of Estate Agents and Solicitors, there are however a few Home Information Pack Companies that seem to be trying to convince Mortgage Brokers that they are ideally placed to be the local provider for Hips, as most of you will appreciate the likelihood of a local Estate Agents with an in-house Mortgage Advisor, asking another local Mortgage Broker to prepare his HIPs packs for him seems remote at best.

The more likely scenario is that as a Mortgage Broker you will come across clients who are not selling through Estate Agents and then you could and should provide guidance on the provision of HIPs and probably will facilitate the transaction with your preferred provider.

Will your clients still need a Mortgage Valuation from their lender?

The short answer will probably be yes, but as with everything it isn’t quite that simple. A growing number of HIPs providers and industry people alike seem to think Lenders will simply rely on the Home Condition Report (HCR) and a desktop valuation (AVM) I would doubt most lenders will be that foolhardy.

Traditionally lenders have insisted on instructing their own valuations not just for the obvious but to a certain extent as the eyes and ears of the company, thus a HCR carried out by a company not known to the lender or by a newly qualified Home Inspector may cause risks to the lender they may not wish to take.

Remember lenders are under no obligation to do anything when Home Information Packs are launched on the 1st of June 2007.

Will the housing market be adversely affected by the introduction of HIPs?

A recent study by the Oxford Economic Forecasting (OEF) commissioned by Gmac-RFC indicated that if there were to be a 10% reduction in house sales due to the introduction of Hips it could cost the country 42,000 jobs and if there was a 25% reduction the cost in jobs could be 93,000.

The only trouble with this research is that there may be no reduction in house sales due to the introduction of HIPs and therefore no loss of jobs and no problem to the economy, the truth is as with most things in life you just don’t know until it happens, consumer support of Hips may be overwhelmingly positive and this may create renewed confidence in the housing market.