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Funding for Lending must go further – Paragon

by: Paul Clampin
  • 23/05/2013
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Funding for Lending must go further – Paragon
The modest compromise on Funding for Lending offered by the Bank of England to non-banking lenders, while welcome, doesn’t go far enough.

That said, the news should be embraced albeit cautiously. Certainly there is evidence to suggest that the current raft of government schemes are increasing consumer confidence in the market.

In Paragon’s recent survey of intermediaries’ opinions, we heard that demand has strengthened significantly over the past three months, and there has also been an increase in the number of landlords who say the availability of buy-to-let finance has improved.

Other reports tell us that the number of first-time landlords in the buy-to-let market is on the rise. More and more people are seeing the potential returns available over and above traditional products and are choosing to invest in property as a long-term investment.

Indeed, the Private Rented Sector too is on the up – the latest statistics show that 4.2 million households now class it as home, up 1.6m in the past decade. And that figure can only rise.

Figures from ARLA suggest that people are staying in their rented properties for longer, with the average stay now at a record 20 months, and demand is outstripping supply in many areas.

However, before we start popping the champagne corks, I’d like to explain my caution. It’s still too early to tell whether any of the new schemes – including Funding for Lending and Help to Buy – are having any real impact on figures.

There have been a wide variety of supply side measures aimed at stimulating demand but evidence of a genuine and sustained improvement in transaction numbers – the acid test of consumer confidence – has been slow in coming through.

Paul Clampin is director of underwriting at Paragon Mortgages

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