If proof were needed that many charity and quango chiefs inhabit a different planet to the rest of us last week marked a new low. The boss of a leading charity suggested that first-time buyers should sit an exam to assess their fitness to buy a home before they are allowed to proceed.
Malcolm Hurlston, chairman of the consumer charity with the catchy title of the Consumer Credit Counselling Service, in a speech called for mortgages to first-time buyers to be sold like driving licences, after a course of study and an exam.
He went on to criticise tax breaks and other incentives available to first-time buyers, stating that first-time mortgages should come with health warnings attached rather than pretty ribbons.
Hurlston points to the pre-mortgage counselling programme operated in the US, principally aimed at individuals on low incomes. As well as offering advice on buying a home this federal initiative offers low-cost advice on renting, repossession and credit issues. It has been expanding since the early 1990s.
In his speech Hurlston stated that the people most likely to get into trouble with their mortgages are those who have purchased a home too soon, although I’m not sure what this means. Anyway, he further qualified his remarks by adding those on low incomes into the high risk mix as he sees it. Genius.
Meanwhile, the Council of Mortgage Lenders says most people who get into trouble with their mortgages have suffered a change in their economic circumstances such as redundancy or divorce.
Encouraging first-time buyers to come back is key but making them sit an exam is not the way to do it
So once again we see an influential non-governmental body making recommendations while not in possession of the facts and viewing an overseas solution as a cure-all placebo that can be replicated in our market.
Unlike the US, mortgages sold in the UK are regulated and therefore subject to a high level of scrutiny.
Since 2007 the lack of mortgages available for first-time buyers coupled with the increase in deposits required – as well as the additional proof of affordability now demanded of all applicants – has effectively restricted first-time buyers’ access to the market.
This has resulted in more potential first-time buyers renting for longer – often well into their 20s and an increasing number into their 30s – before embarking on house purchase.
Innovation in the mortgage market is to be welcomed, especially at a time when we are seeing tentative green shoots in the property sector.
And first-time buyers are the life blood that feeds the housing market so encouraging them back is key to the revival of our industry. But making them take exams is hardly the way to do it. Back to the drawing board.