News Review
The road to mortgage market Nirvana By Sarah Davidson and Yuan Phoon
Market forces and the govern- ment can both act as a catalyst to break the stalemate in the mortgage market and help to encourage conditions that are conducive to housing mar- ket sustainability. That was the message from Paul Smee, di- rector general of the Council of Mortgage Lenders, speak- ing at the trade bodies annual conference this month. While there are a number
of obstacles on the “road to Nirvana” - regulation and neg- ative sentiment among them – Smee told delegates that better market conditions were attainable with effort. He cautioned regulators
against blind regulation say- ing that if they didn’t treat it with proportionality the CML would lead the challenge against them. And he warned
Self-employed borrowers given
small boost By Sarah Davidson
gE Money and Northern rock have extended the terms on which they will ac- cept self-employed borrow- ers. gE will lend up to 80%
LTV at rates starting from 3.99% to self-employed cus- tomers provided applicants have proof of income and have been trading for at least two years. Northern rock will also
now accept self-employed mortgage customers who have been trading for two years, down from its pre-
against the danger of self- reinforcing gloom, remarking that current sentiment echoed that of the 1970s, which was then followed by the high- growth economy of the 1980s: “so the wheel will turn”.
Buy-to-let Buy-to-let mortgages against residential properties may be caught by European regula- tion currently being debated in Brussels. And Jackie Ben- nett OBE, CML head of pol- icy, admitted the complete exclusion of the UK from Eu- ropean buy-to-let regulation was an area which the trade body was losing traction on. “Treasury is fighting as hard
as we are, lobbying to Europe to try and get buy-to-let out of scope,” she said. Yet within hours the Finan- cial Services Authority said for
vious requirement of three years. Brokers must still sub- mit two years’ worth of ac- counts. gerry Bell, marketing di-
rector at gE Money Home Lending, said the launch was in direct response to “the current demand and limited choice available to custom- ers”.
Although all lenders say
they offer mortgages to self- employed borrowers brokers complain loudly that the pa- perwork makes it nigh-on im- possible to help their cus- tomers get approved. David Sheppard, managing director of London-based Perception Finance, said both Northern rock and Woolwich offer deals for shareholding directors wish-
4 MOrTgAgE INTrODUCEr NOVEMBER 2011
the first time that it saw “the logic” of regulating buy-to-let. Sheila Nicoll, director of conduct policy at the FSA, told delegates that regula- tion was a “matter for gov- ernment”. But she added: “We certainly see the logic in having buy-to-let regulat- ed alongside the residential mortgage market.” And Michael Coogan, for-
mer CML director general, tweeted: “FSA ambivalence on regulation of buy to let is one reason Brussels debate will be uphill from here.”
Shooting Beans Industry experts were quick to shoot down claims made by Bank of England deputy governor Charlie Bean on the day that mortgage de- mand would rise as inflation dropped next year.
ing to use retained profits in their incomes. Abbey for Intermediaries meanwhile will take divi- dends into account when as- sessing income. Sheppard said: “Sadly their attitude to this key demo- graphic is not matched by many other lenders. It is time for all lenders to look at the way they consider self-em- ployed. “No one expects lenders to
agree to provide mortgages for those with little or no trading history but common sense underwriting has dis- appeared as lenders run for safety.” He argued that more lend-
ers should take time to review accounts in greater detail. “Personally I think the ma-
Speaking to a packed audi-
ence Bean claimed that real household incomes would “be less squeezed” in 2012 as inflation fell back, meaning people would be able to save for deposits. But Phil Jenks, the former
Halifax guru and renowned industry expert, said there was no evidence that would happen. “It is far from clear whether
people will pay down their debt or save as their incomes rise. If you look at savings in- flows into banks and building societies there is no evidence they are saving to date,” he said.
And David Finlay, interme-
diary channel director at Bar- clays, added even if people did start to save more it would still take first-time buyers years to save the deposit.
jor lenders should invest in having dedicated underwrit- ing teams for this type of ap- plicant as if they did so, I be- lieve the market would improve significantly,” he added. And Andrew Montlake, communications director at London-based Coreco, said: “The self-employed are a group of people who have every right to feel hard done by due to the many cri- teria changes from several lenders. “These are the very small business owners who need to be supported during current economic conditions and for those who have started their own business in the last few years many are struggling to get finance.”
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