MS Leader: The right building blocks?

The market continues to look healthy, with the Bank of England’s latest money and credit report the number of loan approvals for house purchase in July this year was 60,624, a 30 per cent increase on the 46,665 approvals in July last year.

Obviously if this just creates another property bubble in hot spot areas in the South East and London, then in the long run be no good to anyone.

Rather than another boost in house prices what the UK desperately needs is a construction boom.

While there has been a small pick-up in housebuilding figures it is from chronically low levels and much more needs to be done to increase supply.

Little wonder then that think tank the Adam Smith Institute called for the Government to scrap its Help to Buy scheme and instead focus on ideas to improve supply such as abolishing affordable housing quotas and releasing more farmland for development.

However if higher equity levels have helped to improve home affordability for so called second steppers – the terms Lloyds Banking Group has come up with to describe homeowners currently living in their first home but looking to take the next step up the property ladder – then that good news at least.

A key cap on mortgage intermediaries’ income in general over the last couple of years has been an inability for some borrowers to do anything, be it remortgaging or purchasing an even bigger property.

Another cap is obviously the amount lenders are willing to pay them. Countrywide Group’s Nigel Stockton makes a compelling case in his column on page 27 this week as to why proc fees should go up.

Whether the lenders will listen, especially with the additional costs from the Mortgage Market Review, is another question.