From top left to bottom right: Gary Styles, strategy, risk and economics director at Hometrack; Alan Cleary, managing director at Precise Mortgages; Tony Ward, chief executive at Homefunding; Rob Thomas, senior policy adviser at the Council of Mortgage Lenders; Fionnuala Earley, UK consumer economist at Royal Bank of Scotland
going to enter the market or buy a car today if they’re going to get cheaper tomorrow. Alan Cleary: From a lender’s perspective, new build is discriminated against because of past issues with valuations. Most lenders will discriminate against new build houses; we do and most lenders will go beyond that and discriminate against new build flats even more. The exit for that asset for the builder is now constrained. They can’t build more because they know that people cannot afford to buy it.
What Would move lenders aWay from that? AC: There are a number of things which the market needs to rectify itself. There’s an oversupply of new builds in certain spots throughout the country. There was lots of speculation from buy-to-let investors that drove up the demand which
has now gone away. I would prefer not to see an incentive with new build because it’s a way of keeping house prices artificially high.
What kind of incentives? AC: Some house builders offer incentives for the consumer to buy the property which has the effect of making valuations quite opaque and difficult for the lender to get their head around on what it’s actually worth. FE: That was really behind why they changed valuing new build as second hand to get around that issue of incentives. Rob Thomas: The disclosure of incentives form which came in 2008 has now revealed that transaction in all its glory so there shouldn’t be any opacity there. AC: The easy way for me to get around that problem is to just not lend on new
build. I don’t have enough money to lend to everyone anyway so that one is definitely going into the “too difficult” box. GS: I’m always very concerned with having to put more marginal customers from a risk perspective, into new build. When you’re looking at the overall risk from a lender’s perspective, you’re looking at the customer risk but also you’re putting them in a property where they’re more susceptible to a house price decline. TW: None of this is a surprise but actually if you’re a bank and you have a limited capital and that capital is constantly under stress and you’re being asked to put in capital buffers by the European Central Bank, do you want to use it up on 100% risk loans to commercial developers? I don’t think so. On the housing market and the new build unfortunately the only way I can see this getting off the ground as an issue is structurally and politically for the country.
mortgage introducer DECEMBER 2011 37
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56