Mortgage professionals will have a pivotal role in reviving the housing market industry leaders have said.
Meeting at the Chartered Insurance Institute leading industry figures agreed the volume of mortgage transactions were currently at 80% of the levels seen this time last year. But they suggested the way to reinvigorate the housing market was for intermediaries to continue to develop their technical skills and lenders develop new innovative products.
Richard Fox, chairman of the Society of Mortgage Professionals, says: "It is important that we help the first-time buyer market, where people are often held back by the fact that they cannot borrow sufficient money to get on the housing ladder. This is often because lenders calculate what they are willing to advance on the basis of income multiples. The industry should consider selling on ‘affordability’ rather than multiples, which would increase the size of potential loans in many cases. This is entirely appropriate in a stable, low interest rate environment."
Stephen Smith of Legal & General says products should be developed to accommodate demand: "There are products available which enable parents to guarantee repayments by their children, increasing the size of the advance. But these are not from mainstream lenders. We should see more activity in this area," he says.
He also suggests the government should play a bigger role in helping first-time buyers: "You cannot have a healthy mortgage market with a low number of first-time buyers. Given the importance of mortgages to the economy as a whole, this is something which needs to be addressed as a matter of urgency."
Of the proposal to introduce Home Information Packs (HIP) in 2007 Fox says there might be an unforeseen effect: "If people have to pay £700 to create an HIP, it will stop people putting their house on the market speculatively, which will reduce the total number of properties on the market at any time and thus have an impact on supply, demand and prices."
Meanwhile, new rules designed to enable self-invested pension plans (Sipps) to include residential property led to suggestions this might trigger an additional £5bn of mortgage borrowing during the year.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Matthew West on 020 7484 9893 or email [email protected].IFAonline
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