It has certainly done that – and we welcome Lynda’s Blackwell’s contribution to the debate for a discussion is needed.
The message in our report is quite simple – those people who are able to buy a house enjoy a significant financial advantage over those who are not – potentially more than £350,000, in fact, over the course of their lifetime.
The financial crisis of 2008 has not faded from our industry’s memory – and IMLA absolutely believes that the regulator was right to tighten up its rules governing the way mortgages are sold in order to protect both consumers and lenders from a race to the bottom which ultimately did neither any favours.
But in a world where there is more emphasis on individuals to provide for themselves, including, but not limited to, a much longer retirement, the cost of care, the cost of university education, the cost of housing – it does feel as if the current mortgage market regulatory framework risks exacerbating the wealth gap.
There appears to be a sizeable tranche of customers who could afford a mortgage but are not currently able to get one. They can make the monthly payments, on a repayment basis. But they’re still locked out of the market.
Sleepwalking to a greater divide
IMLA’s report calls on the government to look closely at the figures to understand if the market is working as it should for aspiring homeowners.
We must avoid sleepwalking into a situation where there is an ever-larger financial divide between owners and renters. If we do not, we could be storing up problems for later life renters who may struggle to pay those rents but have no other realistic options.
We need to find a sensible regulatory balance between preventing the detriment caused to those who borrow too much and fall into arrears, and facilitating those who can afford to buy into the market.
If, when assessing the regulatory structure, we do not take account of the cost to those who have been excluded from the market, we won’t know where that sensible balance lies.
IMLA’s report was not intended to argue the “rights and wrongs” of specific aspects of regulation – rather the extent to which the layering of different, individually perfectly reasonable, rules may have impacted on a larger group than originally intended.
We think the figures presented in the report are persuasive and sufficiently compelling to warrant a discussion and examination of the mortgage market, including but not necessarily restricted to the way in which it is regulated.