Alex Hammond: I think we need to be careful that we don’t talk down the market too much. There is further funding coming into the market. There are a lot of first time buyers out there who think they can’t get a mortgage and so don’t even try. If their high street lender turns them down they may not know they have other options. JM: That’s an easy statement to make but life is not easy. Getting a mortgage is not easy. I think that’s important to say. AH: That’s true. I think I’m saying that there is more funding coming into the market. It’s not going to be as cheap as it was but it will be there. It’s not going to be as much as it was but it will be there. We shouldn’t write off buying for all first time buyers. Rob Jupp: I’d add to that. Renting a property’s not always a bed of roses. Landlords can require six months’ deposit, longer tenancies and credit checks. A hugely competitive rental market is forcing a group of people to go to less scrupulous landlords and take houses they don’t really want, perhaps not near the right schools for example. As a result, homeownership is finally becoming a bit of a political hot potato. You can’t underestimate the number of people who are unhappy about the conditions they’re living in for whatever reason. deep social housing cuTs and consTrained morTgage finance are squeezing access To housing for a large number of people. The privaTe renTed secTor has been Tipped To pick up The slack. can iT? AC: There’s a paradox here. Government cuts are such that the social housing sector simply can’t pick
“THERE IS MORE FUNDING COMING INTO THE MARKET. IT’S NOT GOING TO BE AS CHEAP AS IT WAS BUT IT WILL BE THERE. IT’S NOT GOING TO BE AS MUCH AS IT WAS BUT IT WILL BE THERE. WE SHOULDN’T WRITE OFF BUYING FOR ALL FIRST TIME BUYERS.”
up any of this slack. But the buy-to-let market will struggle to. In 2007 £44 billion was lent on buy-to-let. It’s now down to £8 billion. There has to be a joint push to address this issue. More houses need to be built and the government needs to consider the balance it wants between private and social rented housing. DF: Alan’s right. While lenders can choose who they lend to and how much they lend, that is going to continue. It comes back to risk – it’s a no brainer choosing between doing four loans at sub 60% LTV and one loan at 90% LTV. JH: We have to work with the regulator to understand what kind of market we want going forward. What the Financial
Services Authority seems to be saying to the British public at the moment is, actually, we don’t want you to borrow so much money, we don’t want you to be homeowners, we are happy to see significant social changes and we don’t mind the consequences. We might end up with a market characterised by low volumes and a higher proportion of private renters because a larger number of people are being shut out by both the cost of money and the rules around lending.
Whether the rented sector can pick up that slack is a very interesting challenge because the same pressures impacting on the residential market are also impacting on landlords. 11% of landlords own 75% of the property – it’s those individuals who find it hardest to get a buy-to-let mortgage. Small time landlords are easy to finance but the higher density, higher yield portfolios are much harder to find money for - harder still to find a rate that encourages you to expand the supply of property. JM: The number of people registering for Shelter has gone up sharply in recent months which goes to show that where many people are going to live is now becoming a major worry. Grant Shapps, the housing minister, is still outside the cabinet but I think that will have to change. Housing is such a major issue. Rob Jupp: Especially with a general election in four years. Housing is critical for voters. It’ll be right at the centre of things because it’s Basildon-man who is totally shut out of the market and pissed off that he can’t buy and has to pay high rents to live where he doesn’t want to. JH: In terms of what the industry can do to help pick up this slack, it has to come back to the capital markets and funding. Getting this moving again will be where our time is best spent.
mortgage introducer FEBRUARY 2011 39
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