Tag Archives: financial
Call for review of UK housing policy
The UK government needs to review its current housing policy and commit to a managed withdrawal of current property market support as a priority, according to the Intermediary Mortgage Lenders Association (IMLA). It has published its criteria for housing and mortgage policy pledges in the build-up to the 2015 election and says that with owner occupation set to fall from 64% to 59% in the next parliament, an ‘open and frank debate’ is needed about whether conservative lending benefits all. The IMLA argues that a clear overarching housing strategy is an essential requirement for the next government. This would replace a policy focus that has frequently favoured short term, eye catching and also conflicting measures over the last 30 years. As a result, successive governments have prioritised specific market segments at the expense of others rather than following a cohesive strategy across tenures and parliaments. In its paper UK Election 2015 – criteria for housing and mortgage policy pledges, IMLA also asserts that regulators’ response to the financial crisis and lenders’ responses to the new rules and their supervision have created a more conservative mortgage market. With owner-occupation set to fall from 64% to 59% over the next five years over the next parliament, the IMLA calls for the next government to ensure a more appropriate balance of choice and protection for consumers, in place of fragmented policies and regulatory interventions. The document sets out five specific requirements that should be tackled by the next government. These include establishing a programme for a properly managed withdrawal of government measures supporting the housing market and implementing a state or privately backed mortgage indemnity guarantee (MIG) to succeed Help to Buy and support high loan to value (LTV) borrowing in the long term. It also includes introducing measures to support downsizing by older households and increase liquidity in the housing market, carrying out a full review of the cumulative impact of regulatory changes for mortgage lending, including new capital adequacy requirements, macro-prudential rules and affordability assessments and engaging in an open discussion on the role of the sub-prime mortgage market in helping to meet consumer needs. ‘There are difficult and worsening housing problems across most of the UK, which mean the housing and mortgage markets will be a dominant issue in the 2015 election. A number of key agendas demand a response from politicians, and the consequences of their actions are likely to be felt for many generations to come,’ said Peter Williams, IMLA executive director. ‘We need to recognise that tenure patterns are changing and there is a wider diversity of housing needs in modern society than ever before. Home buyers face much greater challenges as a result of house price rises and financial services regulation. Private renters are confronted by high rental inflation and variable quality and social renting no longer provides an adequate safety net for those who cannot afford to house themselves via the market,’ he explained. He pointed out that a… Continue reading
CML voices concerns over European mortgage changes
The Council of Mortgage lenders has identified four main areas where a change of approach is needed to achieve minimum disruption to the UK mortgage market from European changes. In its response to the Financial Conduct Authority’s consultation on implementing the European Mortgage Credit Directive (MCD) in the UK, it says there are not sufficient measures to manage the transition to MCD rules. The submission says at present, there is no provision for ‘pipeline cases. Such a provision was crucial in the successful implementation of the Mortgage Market Review and the CML believes this approach should be replicated for the MCD. It also says that fundamental changes to the sales process that will confuse customers. The new requirement for a reflection period following a binding offer does not need to introduce a new step in the conveyancing process, as the current implementation proposal suggests. The CML says that the formal offer should be treated as the binding offer and this fully addresses the MCD requirements while minimising confusion. Another major issue is ensuring the MCD applies to new lending only. As currently drafted, the proposal is confusing and could be taken to apply to contract variations, which is not the intention. The FCA should make this explicit, says the CML report. The other concern is the disruptive definition of foreign currency loans. While the CML agrees with the objective of mitigating the risk of currency variation, the proposals apply too widely and the scope should be more narrowly defined. ‘The Directive provides little if any benefit to UK consumers or the operation of the market. We believe that both the government and the regulator share this view,’ said CML director general Paul Smee. ‘So, while we naturally recognise the need to comply, we believe that the UK should do so in a pragmatic way that disrupts the existing robust regulatory regime as little as possible,’ he added. Continue reading
Spanish properties prices up 1.15% in third quarter
Residential property prices in Spain rose 1.15% in the third quarter of 2014 compared to the same period last year, according to the latest index published by the Property Registrars. That is the first time this index has edged clearly into positive territory since the Spanish housing bubble burst, and according to real estate expert Mark Stucklin it means the market could be turning. On a quarterly basis prices were basically stable, with a decline of just 0.08% between June and September and the peak to present fall in house prices is 32.4% according the Registrars’ figures. It says that these figures paint a picture of stable house prices. The registered number of homes sold also shows a favourable evolution with transactions up 1.4% to 79,561 sales in the third quarter compared to the second. The market bottomed out with 72,560 sales in the fourth quarter of 2013. The improvement was driven by resale properties with 52,127 sales, practically double those of new builds at 27,434. Resale transactions were up 4,268 on the second quarter, meaning a quarterly rise of 8.92%, against a fall of 10.36% in new builds. Cumulative sales over 12 months were 313,607, up by 2,743 on the second quarter of the year when a record low of 310,864 was reached. Andalucia saw the most sales with 16,006 transactions, followed by the Valencia at 12,189, Catalonia at 11,975 and Madrid at 10,883. The data also shows that the proportion of Spanish property sales involving a foreign buyer has hit a new high of 13.1% market share, an annual rise of 19% and year to date, foreign buyers bought 30,708 properties, up 23% on the same period last year. British buyers were the strongest nationality buying 1,886 Spanish properties in the third quarter, up 37% on the same time last year, followed by the French, Russians, and Germans. In terms of foreign market share, the British represented 18% of total purchases by foreigners, and 20% of key markets. France was next with 12%, Russia with 8%, and Germany with 7%. Stucklin pointed out that in the boom years foreign buyers, led by the British, accounted for between 8% and 9% of the market. That fell to a low of 4.24% in 2009, at the nadir of the financial crisis. Since then foreign demand has increased in market share whilst local demand continues to shrink. ‘For the last year or more it has been possible to buy new property in Spain for less than it costs to build, thanks to a housing bust that has forced banks to take over thousands of new developments, and repossess hundreds of thousands of new or recently built homes. Such low prices are a once in a cycle situation that will not be repeated again, at least not until the next boom and bust, which could take decades,’ he said. He also explained that there are bargains, especially when it comes to property owned by the Spanish banks. ‘Not only are there thousands of… Continue reading
