Both industry bodies represented the mortgage, housing, insurance and charitable sectors at the first-time buyer industry summit yesterday chaired by Housing Minister, Grant Shapps.
Paul Broadhead, BSA head of mortgage policy, took the opportunity to re-iterate it is not merely the shortage of mortgage funding that is causing difficulties in the housing market for first-time buyers.
Broadhead commented: "There have been increasing affordability issues in recent years as house prices outstripped earnings growth. There are also demand side factors to consider such as volatile house prices and job insecurity which continue to make potential first-time buyers nervous.
Any initiatives focussed purely on first-time buyers, without a sufficient increase in house building, could push prices up for entry level properties; particularly if second-time movers have low or negative equity.
“Funding, both the availability and cost of it, continues to cause difficulty for mortgage lenders. As does the increased cost of lending at higher LTVs (through new capital requirements)."
The BSA believes that the meeting could be the start of a process that re-examines and re-evaluates the housing market and that bringing industry and government bodies together in one room has kick started the process. It urged caution, however, against the meeting being viewed as an immediate solution to all the issues faced by first time buyers.
CML director general Michael Coogan agreed: "It is good to see Ministers taking the initiative to discuss how we can look to improve market conditions for first-time buyers. But no-one will be surprised to learn that there is no simple quick fix for a market that has changed fundamentally since the credit crunch.
“Creative approaches have a role to play in helping to turn market stability into market recovery, and lenders look forward to working constructively both with government and the housebuilding industry as we look to help create the kind of conditions conducive to responsible innovation."
