For all that, there are some leading indicators that are starting to tell of market improvement.
This news comes just at the time that the Chancellor makes housing and his new, Help to Buy scheme, a flagship Budget announcement.
As is standard, the intent was clear but the detail scant. We are looking forward now to working constructively with government to flesh these schemes out.
It is positive that it was not totally focused on new homes and first-time buyers. Certain questions are naturally top of mind, not least the potential for crossover with a number of similar private sector schemes already available.
For our members, who have already been stepping up to the plate in the higher LTV space – 35% of lending in 2012 was at LTVs of 80% and above – questions around capital relief will be high on the agenda. For the schemes to succeed, capital relief must be available to all lenders.
If it is, and the FCA and PRA are happy, then there is the potential for additional lending at 80% plus LTV. It’s unclear whether ‘state aid’ rules apply here, though on the basis of the commercial fee the assumption is no. Then of course there is the cost and whether it can boost much needed home building.
So a positive idea, that hopefully can be made to work. It cannot and I am sure won’t push the market towards what some headlines have described as a new boom in sub-prime lending. Responsible, affordable lending will remain the name of the game.
The other imponderable is market demand – supply is just one side of the equation. Here, the insights from the BSA’s Property Tracker indicate that consumer sentiment which drives demand is looking up. More people expect prices to rise and think that now is a good time to buy. Deposits remain a barrier so ‘spot on’ George Osborne.
Whilst Help to Buy may or may not prove to be a major market intervention, what government has done at the least is add in some interesting ingredients.
Time will tell whether working together we can turn these into something that will genuinely boost the whole housing market and help consumers achieve their aspirations.
Paul Broadhead is head of mortgage policy at the BSA
