MORTGAGElending
mortgages; lenders are in the most part already requiring proof of income. It is likely that buy-to-let mortgages will
also come in for tighter regulation. Few buy-to-let borrowers are wanting to take further lending at the moment, whatever the regulation of the market. It is unlikely that the imposition of
formal loan-to-value limits and/or income multiples will be introduced, which are felt by some to be the only measures which could regulate the market in the long term. In the short term they are not needed as lenders are already rationing credit and mortgages as they fear further bad debts. Other measures are seen as being the
cause of the problem. Some blame withdrawal of regional housing targets by Mr Shapps, which were introduced by the Labour government, as the cause of the fall in the number of homes being built. The New Homes Bonus incentive, under which councils are rewarded for allowing development in their area, have replaced the targets and their impact will need to be monitored. The
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www.propertydrum.com 32 FEBRUARY 2011 PROPERTYdrum
‘Although prices have recovered some of the ground they have
lost over the past year, they are still about 15 per cent down on the peak.’ HENRY PRIOR
www.HOUSINGEXPERT.NET
budget for building affordable homes has also been reduced by the Government as part of its cost cutting measures. Less social housing means that people on more modest incomes are unable to get onto the housing market.
THE cRUX Of THE ISSUE The crux of the issue is that any changes to the regulation of the market will always be fraught, especially considering that net housing equity - the value of peoples’ houses after mortgage debt – that is valued at £2.4 trillion even after the fall in house
prices and mortgage debt – is 50 per cent larger than the total sum of credit extended to all businesses. The availability of mortgage credit has
a significant impact on the housing market and any regulation will inevitably affect the lenders ability and willingness to lend to homeowners. Lenders have already tightened their lending criteria and they would have to comply with the proposals provided in the FSA’s review if implemented. But if the proposals are implemented, they will however change the landscape of mortgage lending for the future; stricter lending criteria will safeguard more borrowers from overstretching themselves and falling into mortgage arrears, but will make it difficult for many to obtain a mortgage, especially first time buyers.
Alistair Bertrand is a solicitor and director of Chebsey & Co.
aab@chebsey.com
Add your own comments online at:
www.propertydrum.com/articles/fsafeb
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