Comment: Market assessment? We’ve heard it all before


‘The first comprehensive review of the mortgage market in a decade….’

This is according to the government press release following Boris Johnson’s housing market announcements earlier in June.

If you thought it sounded like a hodgepodge of measures, designed to try to alleviate some of the sting of a rather tight ‘vote of no confidence’ for the Prime Minister, I might agree with you. .

You can’t rob PRS Peter to pay FTB Paul

Headlines have been taken by an apparent focus on providing the right to buy to housing association tenants, although it looks like initially this will be just another small pilot project to begin with, and it should be funded from existing budgets.

Then there was the so-called Benefits for Bricks measure so workers applying for housing benefit could choose to use that money for a mortgage or pay it to a landlord. To say there are a number of potential hurdles to overcome with this – including whether lenders will want to get involved – would be an understatement.

Make the process smooth, less stressful and less prone to wasting time, energy, investment and resources

And then, another review of the mortgage market. The government says it’s the first in a decade, but anyone involved in our industry knows it’s under constant review, including by the Financial Conduct Authority and the Prudential Regulation Authority, not to mention the Department for Leveling Up, Housing and Government Communities, and all sorts of other bodies set up to oversee those who participate.

Usual focus

The review seems to focus on first-time buyers (FTB); a demographic that has hardly been far from the thoughts of various governments over the past two decades.

You will feel a lack of coherent thinking at all levels

What questions will he ask that have not been asked every day since the credit crisis? Why is it difficult to save for a deposit? House prices are high, incomes have not kept pace, and savings rates have been pitiful.

Why is it difficult to get a 5% deposit? Well, before the government guarantee, lenders didn’t want to move that particular risk curve up – now they’re more likely to offer it.

Why aren’t there more people on the housing ladder? All of this, plus a lack of supply, a lack of new construction and a lack of affordable housing.

If you are going to intervene in the market, you must accept that there will be ongoing consequences

These questions are all well known and one wonders what an opinion can come back and tell us that we don’t already know.

Greater use of mortgage insurance by lenders will help generate more 95% loan-to-value products? We know it.

Deposit levels are very high, even if you save 5%? We know it, which is why Mom and Dad’s Bank is more popular than ever.

My big fear is that we will get an independent mortgage market review that once again comes back and says we need more long term fixed rate mortgages

Tenants struggling to save money for deposits? Well, that is not helped by the government hammering on private rental sector (PRS) landlords to such an extent that they are selling which means less supply which means higher rents.

You will feel a lack of coherent thinking at all levels. I can’t deny that we need more new FTBs, but various governments have tried to do so believing it was all the fault of the PRS owners. Sweat their trump card and it will end up in beginners’ hands, right?

The answer is no, especially when many FTBs want new homes, which of course we don’t build enough to meet that demand.

The government says it’s the first review in a decade, but everyone involved in our sector knows it’s under constant scrutiny.

Transforming Generation Rent into Generation Buy may seem like a laudable policy, but we have to accept that we are not starting from scratch. You cannot rob PRS Peter to pay FTB Paul and if you want to intervene in the market you must accept that there will be permanent consequences, especially if the supply of goods at all levels is far from sufficient . Rising rents, rising prices….

Much more complicated

My great fear is that we will receive an independent review of the mortgage market which once again comes back and says we need more long-term fixed rate mortgages, as is the case in many other countries .

We have them here in the UK, but they won’t be responsible for installing thousands and thousands more FTBs in new homes. As someone may wish to point out to the Prime Minister, it is much more complicated than that.

Headlines were taken by an apparent focus on providing the right to buy to housing association tenants

Instead, why not start by improving the home buying and selling process for everyone? That in itself would get more people into more homes, rather than the thousands each year who see their deal fail.

Make the process smooth, less stressful and less prone to wasting time, energy, investment and resources and we will naturally move more people and up the ladder. It would be a good first step.

Mark Snape is Managing Director of Broker Conveyancing


This article originally appeared in the July issue of MS.

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