Our market analysis has shown that gross lending to the highest quaity borrowers in the first 11 months of 2008 was only 18% lower than in 2007.
In contrast, lending to prime borrowers with higher LTVs reduced by 34%, while lending to non-prime borrowers fell by 70%.
Achieving a sustained recovery in the housing market will require a return to confidence and the availability of mortgages to a broader range of applicants.
The obvious place to start is with the first-time buyer market.
Residential property is getting cheaper every month and this trend is set to continue for a while.
As property prices continue to fall, house purchase will look more attractive to new entrants.
Lenders have a vested interest in stimulating demand and we must start thinking about financing first-time buyers.
The margins will need to be wider, but with low house prices and interest rates, it should be possible to design products that create value for lender and borrower. But lenders must be selective. Bad payers need not apply.