As we enter March the property sector traditionally begins to settle down and commentators look to housing market figures to see how the year is shaping up. However, with the huge price increases last year, the traditional Christmas hangover caused by seasonal overspending, and events overseas, the true picture is unclear.
The two house-price stalwarts, Nationwide and Halifax, have disclosed their February figures to reveal a significant discrepancy between the two. No surprise there, but it is interesting that other commentators, such as Hometrack and the British Bankers’ Association, have reported similar findings to Nationwide ‘ leaving Halifax out on its own. The majority cited the aforementioned criteria as the reason behind the slowdown, while Halifax claimed not to have been affected. It is unfortunate the housing sector seems to be pulling in different directions at the moment as it sends mixed messages out to an already uncertain market and could precipitate problems that do not really exist.
The early warning signs are already in place, as a report from the International Monetary Fund has urged greater vigilance from UK housing lenders in case external factors caused debt service ratios to rise and burst the housing bubble. While lenders have dismissed fears, the fact that the consumer and manufacturing sides of the economy are so far out of kilter should remain a cause for concern.
While there is little evidence of income multiples being stretched to anything like the proportion they were in the late 1980s, lenders are being made aware that unless they look to develop their product offerings, future graduates will not be able to get onto the housing ladder, which could spell problems in the future if the vitally important first link in the property chain is all but removed.
At this time more than ever, mortgage brokers need to make sure they are doing the best for their clients over the long term.
Ben Marquand, editor