Cover
the little things
They may seem small and insignificant compared to eurozone banks toppling over but the little things are still leading borrowers up the garden path. Sarah Davidson reports
Sophie is 28 years old. She’s been living at home for five years scrimping and saving and hoarding her pennies into a sizeable deposit to buy her first home with her boyfriend Charlie, 34. He’s already a homeowner with a good chunk of equity in his suburban two bed apartment. They both earn good salaries, have stable jobs and university degrees. They’ve been trying to move house for four years but Sophie’s still in her bedroom at home and Charlie’s still champing at the bit in suburbia. Three sales of Charlie’s flat have been
agreed; one even got to exchange before it fell through. Why? The papers said house prices were falling and the buyer dropped his offer – Charlie wouldn’t accept because it sliced off too much of his equity preventing him affording the next property. The next buyer ummed and ahhhed and ummed and ahhhed but got cold feet after months of dawdling because she didn’t know if now was a good time to buy once she’d put the offer in.
The third buyer was in it to win it but got
pregnant and had to go on maternity leave. Needless to say, her mortgage lender suddenly pulled her offer saying she
couldn’t afford the payments anymore because statutory maternity pay was so much less than her monthly salary. Sophie is still in her bedroom with her
parents next door, several thousand pounds tucked in her bank account, waiting. Charlie has steam coming out of his ears and is stuck in his two-bed, plenty of equity, waiting. It’s a familiar story for brokers who, despite a shoddy economy and fragile consumer confidence, are still working hard to try to help people like Sophie and Charlie. For these two deposit isn’t a problem, nor is confidence and nor is getting a mortgage for their first property. Neither could they give a monkeys about the eurozone crisis. Trying to ascertain what’s causing the
problem in the market hinges on this. It’s as much to do with the everyday people problems that go on as it is the macro economic factors we hear about day in day out. Perhaps it is partly for this reason that politicians have so far failed to warm up the housing market and thus the mortgage market. Karen Babington, corporate sales
director at Myhomemove, the UK’s biggest conveyancer for mover
34 mortgage introducer NOVEMBER 2011
transactions, explains cases like Sophie and Charlie are the norm. “We are finding one of the biggest
reasons for breakdowns in transactions is that buyers pull out of their purchase,” she says. “This happens for a multitude of reasons; one of which is failing to obtain a mortgage. “There is a lot of choice out there at the moment so buyers can afford to be picky and pushy - and if the seller won’t accommodate their demands, they will just walk away and find another property.”
Finding solutions We all know about regulation, capital adequacy, eurozone jitters and anaemic economic growth but little time has been spent identifying the micro problems keeping people like Sophie and Charlie from getting on with their lives. Brokers are the best source of information when it comes to understanding why transactions fall through – more often than not borrowers lean on their advisers not just to guide them financially but also to be an emotional support at a time of severe stress. And brokers say there are a few crippling problems causing the market to jam.
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