This fascinating nugget of information was tucked away in the latest news and views paper
from the CML in a feature headed “How quickly will first-time buyers return to the market?”.
I guess that some of the growth in this age bracket will be caused by immigration, but surely it has to reflect a baby boom too? What was going on between 1986 and 1995? Was there nothing on TV (apologies – the old ones are the best and all that)?
Such a demographic shift would appear to dictate that first-time buyer demand will surge to positively tidal wave proportions over the next decade. But when they will actually be able to come back to the market is of course another matter entirely. The obvious answer would seem to be as quickly as the mortgage finance can be made available.
Having just put my two-bed flat in South East London on the market, I can vouch for that. We have been swamped with enquiries, mainly from firsttime buyers, with the odd North London divorcee and Italian palazzo-owning investor thrown in for a spot of colour.
And that is in the current market, where high LTV first-time buyer loans are as rare as
hen’s teeth. Surely there is a wave of pent-up demand just waiting to come crashing to shore once lenders start playing properly in this sector – or am I being too London-centric?
(Answers on an email please).
Is it your first time?
How many first-time buyers have you dealt with this year?
I’ll wager the number is considerably lower than in 2007. OK, that may sound like stating
the bleeding obvious after the blood letting that our industry has undergone over the last two years. But while total business may turn out to have shrunk by 60% in 24 months (£360bn in 2007 to an anticipated £145bn this year), so too the number of advisers has been decimated.
In 2007, there were in excess of 30,000 mortgage brokers in the UK, while the FSA tells us it now believes there are 14,000. Therefore, the average number of cases per broker should not have fallen so dramatically.
But first-time buyer cases are down significantly – from over 100,000 per quarter in 2007 to fewer than 30,000 in Q1 2009, according to the CML. The numbers are now rising slowly, but until the welldocumented liquidity problems plaguing lenders go away, and their appetite for risk grows, many first-timers are likely to remain frozen out by lack of suitable mortgage availability.
Could a revival of the RMBS securitisation market address the liquidity issue at least? Last week saw Nationwide’s £3.5bn securitisation more than twice oversubscribed, as was the Lloyds Banking Group issue a month before. Ah, but of course, I hear you say. They were priced so attractively and with such caveats built-in that they were merely designed to rebuild confidence in a part of the investment market that has had its credibility shot to pieces. And you may well be right.
But the point is, the exercises seem to have worked. Apparently the investment banks are surprisingly enthusiastic about the issues, with at least one of the major players claiming that they can see a revival of the RMBS securitisation market happening within the course of the next year.
This seems incredible with the sector’s history – but then, like the housing market itself, this is an area where confidence is all. I have long said that it takes a psychologist rather than an economist to understand the UK property market – perhaps the description can be extended to the investment market?
