The Power Hour
14-15 November 2012, ExCel, London
for the long term and have sustained that market. The Mortgage Works, BM Solutions and Godiva as part of Coventry probably accounts for anything between 50% and 60% of the market. Then there are Paragon and others returning to sensible lending. There aren’t lenders piling in to make a quick buck. RT: Exactly. This is just lenders responding to commercial reality. The margins on buy-to-let remain higher because of LTV. But lenders aren’t deliberately focusing on buy-to-let to the exclusion of first-time buyers. It’s a series of external pressures that are pushing us towards exclusion of people from homeownership far beyond lenders’ control.
IS A LARGER PRIVATE RENTED SECTOR A GOOD OR A BAD THING FOR THE UK?
PW: Social housing is clearly not growing and there are as Rob says a series of reasons why people are finding it harder to get into homeownership then we need a larger private rented sector. BH: Well no, the solution is to resolve the problem of homeownership access. PW: Globally we have a smaller private rented sector than most other countries and there are arguments about how that impacts on labour mobility and flexibility
in the economy. There is a vulnerability that private renting avoids some of for the wider economy. Personally I think a bigger private rented sector is a good thing and we will have to have it anyway. If an unconstrained funding market produced 70% homeownership and we are moving to a permanently more constrained funding market – at least for a long period – then we are going to see falling homeownership to say 60% and ergo we have to fill the gap. RB: It’s worth noting that the peak in homeownership was in 2003 before the credit crunch anyway and it’s been steadily falling since then and the rate of that fall hasn’t increased since the credit crunch either. It’s now around 66%. BH: But the reason is that house prices tripled and people couldn’t afford to buy into it anymore. It’s not that people didn’t want to buy.
“The reason is that house prices tripled and people couldn’t afford to buy into it anymore”
RB: Well there was a lot of immigration from the EU in 2003 and also we’ve seen a larger proportion of the population go to university which has automatically put the age they buy at later into life. BH: The bottom line is it’s about choice and the majority of private rented sector tenants want to buy one day. PW: But that’s the point – it’s not now. It’s one day. JW: 94% of tenants aspire to be homeowners – that’s the latest research from LSL Property Services. But they can’t do it – only about 10% think they’ll be able to do it in the next year. JH: We have to look at facts here. It’s easy to blow smoke around but the fact is the proportion of first-time buyer mortgages has grown since the financial
36 MORTGAGE INTRODUCER OCTOBER 2012
crisis from about 12% to 16% as an average over the past five years. As a proportion of the whole that means there are more first-time buyers not fewer. Last year lending to first-time buyers was £24bn for house purchase. Last year house purchase for buy- to-let was about £7bn. On numbers alone there is no argument to support the idea that buy-to-let landlords are squeezing out first-time buyers. They’re not. Something else is going on. It is not simply that people are finding it hard to save for a deposit or the lack of high LTV mortgages that is driving demand for rented accommodation and it is demand that drives investment appetite for landlords. There are very real questions about confidence in the housing market, confidence in the state of the economy, confidence in people’s own financial futures. There is not an imperative to buy now if you think house prices are flat – and they most definitely are flat. Add to that all of the demographic changes of more immigration, greater flexibility in employment needs, the fact people form lasting relationships later in life among others people do not need or want to put down roots in the same way as they did thirty years ago. PW: I agree with John absolutely. This is a mixture of choice and constraint. There are reasons why people can’t do what they want to do but there are also jolly good reasons why they are delaying when they buy. JW: There are so many surveys out there that show the biggest reason they can’t buy though. 70% say it’s financial impediment and lack of deposit.
www.mortgageintroducer.com
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