News Review: Housing
The power of positive thinking can grow market by
Stephen Smith, director,
housing and external affairs, Legal & General
Sorry to go all Zen on you, but there’s something to be said for the power of positive thinking.
Numerous pieces of re-
search suggest that having a positive attitude not only en- hances your emotional well- being but can also boost your immune system, reduce your risk of depression and even increase your lifespan. Tour de France cycling su-
premo and cancer survivor Lance Armstrong famously put his survival down to posi- tive thinking. And Winston Churchill once said: “I am an optimist. It does not seem to be much use being anything else.”
Cutting edge
I think the mortgage market could really do with a few more positive vibes. As a sec- tor, we’re great at talking our- selves up when things are go- ing our way - but when times get tough we have a habit of retreating into the corner and looking glum, not unlike my neighbour’s dog after he had the snip. But you probably don’t want to know any more about that.
What I’m saying is: could a bit more positive thinking help get the mortgage mar- ket back on its feet? Rather than constantly knocking it down by focusing in on the negatives, couldn’t we all try to look on the bright side of things a little more often? Not only would this be good for our emotional wellbeing,
it
could have a domino effect and help bolster consumer confidence as well.
Positive outlook I’m not saying let’s lie – obvi- ously the economic outlook remains worrying, with a 0.2% contraction in GDP in the final quarter of 2011 fuelling fears of another recession. And despite agreement on Greece’s second bailout final- ly being reached, the fact re- mains that the Eurozone cri- sis isn’t about to be resolved anytime soon.
But there are pockets of
good news floating round too. The consumer price index measure of inflation, fell from 4.2% in December, to 3.6% in January, its lowest level since November 2010. This came after a surprisingly strong 0.9% rise in spending on both the high street and online in January. These figures suggest that consumers may already be feeling more positive – and according to data provider Markit, households are cur- rently the least pessimistic about their financial pros- pects for the year ahead since April 2010. Market research firm GfKNOP also reports that consumer confidence rose to its highest level since June between December and January.
Highs and lows Let’s make no mistake, most households remain cautious, with job security and pay two of their biggest concerns. But things appear to be improv- ing, rather than getting worse. In the housing market,
we’ve also seen some tentative signs of life recently. Mort-
10 MOrTGAGe INTrOducer MARCH 2012
gage lending fell by 14.4% in January, but was still 10% higher than the same month in 2011 thanks in part to first- time buyers rushing to beat the end of the government’s Stamp Duty holiday.
At L&G Mortgage Club completed business was up 35% last year to £15.8bn, equivalent to a 20% share of the mortgage market. This compares to £11.6bn com- pleted business in 2010 and a 14% market share.
The creation of the Nou- veau Partnership, exander Hall,
with Al- Mortgage
Advice Bureau, London & Country, SPF Private Clients and Stonebridge, helped us achieve this growth. But it’s also due to the hard work of our members and our own efforts to expand the range of lenders we work with. I’m not saying this just to
blow the Legal & General Mortgage Club trumpet – many other firms have re- ported an upturn in business, showing that the industry has held up fairly well as a whole despite the tough climate.
Dispelling the myth As a sector,
it’s time we
worked together to dispel the myth that the mortgage mar- ket is dead and that no one can buy or sell in the current climate. Many people think that they can’t get a mortgage, when in actual fact they can. Higher loan-to-value mort- gages are starting to come back on the market, and low interest rates mean afford- ability is actually less of an is- sue than before 2007. It is up to us to educate cli- ents and the public generally about what their choices are.
Rather than taking a “com- puter says no” mentality, let’s help make people aware of all the options available to them.
More government help Intermediaries are best placed to provide a solution to clients, with our wide ac- cess to products from a range of lenders and our expert knowledge of the market. Let’s use our strong position to share the good news that is out there.
There are things the gov- ernment can do too. Extend- ing the Stamp Duty holiday beyond March would be a good start. The exemption on properties between £125,000 and £250,000 has seen a rise in first-time buyer activity thanks to potential savings of anything between £1,250 and £2,500.
The holiday has proved
itself to be beneficial to the housing market, but in order to turn this flurry of activity into something more sustain- able then the government needs to consider waiving Stamp Duty altogether or implementing a two-year hol- iday period for second-time buyers, who need to be able to move up the ladder in or- der to widen choice for first- time buyers. But without the benefit of a direct line to Westminster, the best the mortgage market can do is make positivity its man- tra for 2012 and see what we can achieve. On that note, I’m off for some well-earned meditation. But I’ll leave you with the words of Lance Armstrong: “Knowledge is power, com- munity is strength and posi- tive attitude is everything.”
www.mortgageintroducer.com
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