Mortgage Solutions asked five experts from across the mortgage industry what if anything can kick-start sales following the post-Stamp Duty slump in April.
While product innovation, lower rates and higher LTVs were common answers, we asked for some outside the box ideas to boost the market.
Angel Mas, president of European mortgage insurance at Genworth Financial:
“People who could normally buy will continue to be unable to unless we have credit flexibility. There needs to be help for people who have steady jobs but who cannot save for a deposit because of high rents.
“We need to make it easy for private guarantors to come in and fill that gap and get the market moving again.
“This is nothing new and has already been proposed by international bodies like the IMF, which has been pushing this for some time. Of course there are no silver bullets, but the diagnosis and solutions are quite clear.”
Jule Wilson, spokesperson for Virgin Money:
“Mortgage lenders should look to help first-time buyers, not only with affordable products at manageable LTVs, but also with costs associated with getting on the property ladder. For example, many of our products include a cashback of up to £500.”
Rob McCoy, senior product and communications manager at Premier Mortgage Services (part of Sesame Bankhall Group):
“Despite the Chancellor stating in his 2011 Autumn Statement that the Stamp Duty Holiday for first time buyers would ‘definitely end on the 24th March as it didn’t work’ – I, like others, would argue against this.
“It may have been a slow start, but that might be due more to other factors in the market, rather than a lack of support from first-time buyers.
“As lenders loosened criteria and house prices levelled, the CML’s own figures showed that new lending during the early months of 2012 to FTBs were better than expected.
“In March, new FTB loans rose by 74% compared to February. It is this type of scheme that I would like to see the government re-introduce for FTBs.
“Even some form of discount on the tax rate or higher thresholds would be an alternative scheme for payment of Stamp Duty Tax by FTBs.
“From lenders, perhaps products which may initially be on an interest-only basis reverting to capital repayments with increased payments after an initial period. This could be linked to particular employment groups or professions.”
Rob Killeen, business director at Capital Fortune:
“We need some form of cross-loan where the government assists and contributes to deposits with an interest-free loan that’s payable over ten years.
“The government has already handed billions to banks. This would be a tiny amount in comparison and would help so many people.”
Ian Wilson, head of sales at Halifax Intermediaries:
“Halifax’s Generation Rent research provided some nuggets not just from FTBs, but their parents gave us some interesting soundbites.
“One said, ‘They need to go back to the basics of life, stop having unrealistic expectations and trying to copy lifestyles beyond their means’. Another told us, ‘Youngsters today do not know the meaning of save. They still expect to do all the social things and then wonder why they cannot afford a deposit’.
“It has prompted some interesting debate about the generational shift in attitudes towards spending and saving.
“Brokers have a really important part to play in supporting borrowers buying their first home. Whether it’s understanding credit history, or explaining affordable housing schemes, the process is different for today’s generation and it’s important that we all realise that.”
