We recently set out our forecast of £130bn of gross lending, slightly down on 2011, but at least there is a likelihood of falling inflation and stable interest rates.
We now have the Mortgage Market Review and the general industry view has been that the regulator has found a fair balance between tightening the regime and ensuring firms can compete.
If the proposals are implemented, there will be some losers. The impact will be greatest in niche non-prime markets, an important part of the intermediary sector. Making almost all sales advised has generated a mixed reaction but many agree with it.
Conversely, the government’s housing strategy did little to lift the market.
In supporting the mortgage indemnity guarantee scheme for first-time buyers, the government fell in line with many other countries in adopting this solution.
It also has strong echoes of the 1930s, when builders were pushing to build more homes in the suburbs and a builders’ pool arrangement, using cash deposits, was established with building societies providing high LTV loans.
Sadly, some societies let valuation standards slip, which resulted in purchasers buying poorly constructed homes way above value. It came to a head with the famous Elsie Borders case in 1938 and though she lost, it forced major changes in lending practice and legislation.
While today’s scheme might not be as exciting as the MMR, it is important it is properly framed to ensure buyers are treated fairly.