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It’s time for action, not hand wringing

Although mortgage lending and house sales are inextricably linked, the government’s attempt to breathe confidence into the banking system has not stimulated new life in either.

It’s difficult to see the return on investment taxpayers are getting for underwriting banks to the tune of billions of pounds. Cynics may say the main beneficiaries are fat cat bankers and their apparently inviolate severance arrangements.

Despite the inviting mortgage advertisements that adorn lenders’ shop windows the deals on offer are subject to caveats, so even those borrowers who are in a position to buy homes are being hampered.

Among the most damaging of these caveats is a result of lenders’ attempts to conform to what now constitutes responsible lending, one element of which is the insistence on deposits the size of St Paul’s Cathedral.

In the days before the economic meltdown, thousands of borrowers showed they were capable of repaying 95% LTV mortgages.

And while unemployment ravaging the land makes the present climate different, unless banks and the government show some faith in the public’s ability to repay their mortgages, hell will freeze over before the housing market recovers.

Scrapping Home Information Packs, refloating 95% LTV loans and suspending Stamp Duty are practical steps that would make a difference. It’s time rhetoric and hand wringing were accompanied by some ballsy action.


The month at a glance

Lord Oakeshott unveiled the Lib Dems’ vision of mortgage stabilityFebruary started with many mortgage brokers finally understanding that it was time to diversify into different product areas.

Lenders must fight their corner

Phillip Tebbatt says politically motivated measures to address problems in the lending market could do more harm than good and the industry fightback should start here

Judge predicts a repossessions avalanche

Courts in the Irish Republic face an avalanche of repossession cases as the recession deepens and job losses soar towards 400,000, a top judge has predicted.

Research shows consumers value societies above banks

Savers and borrowers with building societies are more satisfied than customers of other financial service providers, according to research conducted by NOP and recently published by the Building Societies Association.

Strong dollar can be a powerful driver of UK dividend growth in 2015

By Robin Geffen, fund manager and CEO 

This year threatens to be a challenging one for UK dividend hunters. Last year saw an all-time record amount paid out in UK dividends — some £97.4bn, according to research from Capita Dividend Monitor. Yet as Capita also pointed out, out the biggest single factor driving the growth in the fourth quarter of last year was easy to identify: the rising US dollar. 

In our view, this trend is much more than simply a one-quarter phenomenon. It is actually the most profound issue to get right as a UK equity income investor in 2015. We believe that the US dollar will continue to strengthen significantly from its current level. This is due more to the US economy’s demonstrable de-coupling from the rest of the world than to a view on the UK. The US has a strong chance of tightening monetary conditions this year without jeopardising growth or de-stabilising its housing market. The same can unfortunately not be said about the UK.


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