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Robert Sinclair: FPC will struggle to curb house price growth


We have a resurgent UK mortgage market but it is not yet a normal mortgage market. While most accept the £356bn of gross lending in 2007 was excessive, they are also agreed the £138bn to £144bn seen from 2009 to 2011 was abnormally low.

The return to circa £200bn in 2014 and 2015 is an improvement but still short of the £250bn threshold many consider the base of normality.

It is not just gross lending that has shifted gear. A more important measure from a broader economic perspective is net lending. Real growth in the total of mortgage balances outstanding is more likely to fuel house price inflation.

The more often quoted gross measure is a proxy for market activity, as it drives estate agency, solicitor instructions and valuations – the wider property economy. However, it is the net rate we should consider to debate the likely impact of initiatives on house prices and the wider market.

With UK residential property assets now totalling £5.75trn, the £1.3trn of outstanding mortgage debt looks small.

The fact this asset value has grown by £966bn in the last five years at a time when net mortgage lending has grown by less than £50bn indicates it is not increasing mortgage lending that is the main driver of rising UK property prices.

The volume and value of cash buyers appears to be the main driver of HPI. It is for these reasons any attempts by the Financial Policy Committee to curb house price growth, with loan-to-income or debt-to-income caps, are likely to fail.

Indeed, all this will do is limit the ability of genuine purchasers who can afford and want to buy from getting on the housing ladder.



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L&G hopes restructure will save £80m

Legal & General is set to incur £40m in restructuring costs in a bid to deliver £80m of cost savings this year.  In its half-year results, published last week, the provider says it is pursuing a cost-cutting strategy through the closure of non-core businesses as well as job losses and a review of its UK […]


Ex-mortgage broker loses bid to appeal FCA ban

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Leeds’ valuation pilot shaves up to 5 days off application process

Leeds Building Society is piloting a new method of instructing valuations, which it says has shaved up to five days off the application process. The lender has been testing the new process, which sees it instruct the valuer on the day it receives the application. For fee-free cases, the society contacts the broker to advise […]


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