A recent study by charity organisation, Shelter, indicated that outstanding loans at the end of 2006 reached £1 trillion in the mortgage sector and is growing at a rate of 10 per cent, year on year.
When coupled with suggestions that the number of repossessed properties has increased to almost one in every 700 sales, it is clear that solving, or at least slowing, debt is a factor in need of urgent review by the government and consumer organisations, with the borrower taking greater control of their own finances.
The Financial Services Authority (FSA) has confirmed it is looking into defining consumer responsibility. Commenting on CML data into repossessions and mortgage arrears, Michael Coogan, director-general at the CML, said: “Overall, we expect the total number of mortgages at least three months behind with their payments to rise from around 105,000 last year to 130,000 this year, before falling back again to 120,000 next year. Repossessions are likely to creep up from around 17,000 last year to 19,000 this year, and 20,000 next year.”
HomeBuy
It is clear that greater financial education about debt and its consequences for borrowers is needed and this is also the case with the various HomeBuy schemes in place. The government, over the past two years, in conjunction with a number of lenders, has made strides to make home ownership more achievable among key workers and aspiring buyers.
But the truth remains that many, both inside and outside of the market, know very little about it. The Open Market HomeBuy scheme has recently been extended, with the option of obtaining a mortgage from any prime lender with a loan of 17.5 per cent provided for, while the original scheme – in which the lenders each commit to a 12.5 per cent loan, with the government matching this – has received a limited take up.
Although not designed to be a main part of their lending strategy, the HomeBuy schemes should, over the next few years, increase in prominence, especially with increasing affordability issues – if borrowers are actually made aware of their existence.
HIPs
Home Information Packs (HIPs), designed to improve the housing market, have also been criticised, with many claiming that they have had little impact on the housing market. Having been in development for over a decade, HIPs were designed to make the house buying and selling process more streamlined.
But various government interventions and market conditions have meant that HIPs have had a stunted growth at best, and the recent confirmation by the government that it is to review the housing market before a full roll out of the packs occurs has done little to improve confidence.
However, Mike Ockenden, director-general at the Association of Home information of Home Information Pack Providers (AHIPP), suggests that HIPs were in fact helping to restore confidence in the housing market. He said: “The four and three-bedroom roll out has been successful and seamless.
The market impact has been limited to a blip in listings before four and then three-bedroom properties went live followed by a corresponding reduction in listings immediately after each roll out. Four-bedroom home listings have now returned to normal levels, according to Rightmove data, and three-bedroom homes are following the same trend. I see no reason to delay the commencement order any further.”
While government plans to increase affordable housing has been welcomed, question marks do remain over the type of properties and exactly where they will be built.
It is evident in many city centres, such as Erith, Thamesmead and Gateshead, among others, that regeneration of property and amenities is taking shape and this will go some way to curb the problem of housing stock shortage. However, as highlighted by the recent troubles affecting properties in Thamesmead, that greater checks need to be in place. Page 3
