Association of Mortgage Intermediaries chairman John Gummer had the right subject for his speech at the trade body’s annual dinner last week housing is of vital importance to the entire country.
But, as well as sounding like something Mel Gibson’s Sir William Wallace would have spouted in the film Braveheart, Gummer’s argument that property ownership equals freedom is about 30 years out of date. It would have been the perfect rallying cry to turn council house residents into property owners and would have brought a tear to former Prime Minister Margaret Thatcher’s eye.
But the days of widening property ownership are long gone as the Council of Mortgage Lenders’ figures for April prove. To hit its gross lending prediction of £140bn for 2011 we will need a huge lending boost to even match last year’s £136bn.
The reasons behind this are clear an imminent interest rate rise to motivate remortgaging has receded further each month. Without meaningful stimulus lenders are trying to get things going by reducing rates, with a swathe of cuts in recent weeks.
But many lenders privately complain this is failing to translate into increased volumes because they are all fighting over the same prime, squeaky-clean borrowers.
The net result has been ballooning rents in city centres with the bizarre situation of individuals paying thousands in monthly rent but who are still viewed as an unsafe bet for lenders.
Property ownership does not equal freedom. The government’s focus should be on providing individuals with affordable housing and whether you look at the rental or purchase markets that is patently not happening.