Whether this will prove to be the case or not, only time will tell. But it is interesting to look three years ahead to July 2016 to see how the lending landscape could have changed by that time, based on the Chancellor’s view that the wider economic situation has begun to improve.
Even after this time it is clear that many of the current constraints on the market will still be in place. The Mortgage Market Review will be well embedded, and lenders will have responded to the next wave of changes, including new data reporting and most recently the EU mortgage directive.
Away from conduct regulation, prudential changes will still be flowing through the system.
The recent Parliamentary Commission on Banking is suggesting changes to be implemented as it is keen to see steps taken to ensure the right standards and culture are in place. Prudence and caution are being hard wired into the market.
Any significant expansion in lending will remain dependent on other forms of financing. Funding for Lending will have ended. While its recent use has been limited, its impact on helping to keep down mortgage rates is clear with rates around 1% below those when the scheme was in place.
But a recovering economy will also lead to increases in interest rates. Those who only recently took our five year rates may be smiling at this point, but rising rates will dampen the spending power of many.
A week may be a long time in politics, but three years is not a long time in the housing market. While the Chancellor is hoping the country may well be on the road to recovery, the mortgage industry will still be working out how to respond. And so for business as usual, we need to look much further ahead.
Andrew Baddeley-Chappell is head of mortgage strategy and policy at Nationwide
