Ryan Bembridge analyses the plethora of schemes aimed at first-time buyers entering and leaving the dysfunctional mortgage market
Disjointed policy
Ray Boulgerthinks lenders should avoid the toxicity of offering 100% LTV mortgages by offering one at 97.5% on a repayment basis with a 0% interest rate for the first year.
“It would be down to 95% in 15 months,” he says. “Lenders would do it but because of the capital requirements from the PRA we are in a situation where to minimise the risk to the banking system regulators have made it far more expensive for banks to offer high LTV mortgages.
“This is conundrum and I’m not sure we’ve got the balance right. It’s cheaper to take an unsecured loan to increase the loan-to-value in some cases.”
Bringing up the council house selloff and attacks on private landlords, he added: “There seems to be a disjointed housing policy.
“If people end up renting all their lives they will be a drain on the state later in retirement because they won’t be able to pay their rent.”
If the government wants to benefit the first-time buyer and wider mortgage markets Paul Broadhead says they should offer more support for custom build. “We’ve still got a lot of eggs in the volume housebuilder basket,” he says.
The government should find more ways to bring self and custom build – custom build is working relatively well at the moment.”
As lenders process the latest changes to the housing market one thing is sure, the market is far from simple and the housebuilding problem is one that won’t go away even as more first-time buyer schemes enter the market.
