Ben Thompson, MD, Legal & General Mortgage Club, said the ten points aim to get the mortgage market moving again. The ten points are:
1. Government to waive stamp duty for second-time buyers
Government should consider waiving stamp duty altogether or implementing a two year ‘holiday’ period for second time buyers up to an agreed maximum.
This part of the housing market has become stuck and as a result is restricting choice for first-time buyers entering the market.
Managed carefully this shouldn't result in too much supply of second hand property to the market. Therefore any argument that this might serve to reduce asking prices feels wrong. Consumer confidence, equity levels and mortgage finance aren't sufficiently in supply for this problem to occur.
However, by incentivising those that are thinking about moving to go for it, will help to get the market moving again as well as having a wider and very positive knock-on effect on the economy and employment.
2. Government to fully commit to helping the construction of more new homes, in the right areas
We need more choice. This again would help the construction sector and wider employment, and give more people the chance to find a new home that they need, as opposed to being long term renters.
3. Mortgage industry to dispel the myth of mortgage availability
As an industry we need to combine and work together to inform people as to what their actual choices are.
Many think they can't get a mortgage when in actual fact they can.
People are saving for a huge deposit but may be able to buy their first home more easily and it is up to the industry to make people aware of all the options available to them.
4. Industry and Government to work to free up long term renters
There are many tenants who have rented for many years and have built up a great track record of repaying high levels of rent in a disciplined manner on a monthly basis.
Accepting there are capital constraints and the fact that lenders need to lend sensibly and appropriately, there has to be a large segment of tenants that constitute acceptable risk and should be helped into buying their first home.
More promotion should be done by the industry to court, and provide mortgage products specifically for long term top quality renters. In 1993-5 many were stuck in negative equity - lender innovation at the right time freed this market up where it had been stuck before.
In a totally different world today we are stuck for different reasons and need the market to release. Innovation can help with this.
5. Intermediaries are best placed to provide a solution
Intermediaries have access to the very vast majority of all mortgage products as opposed to just one lender range, which you expect from going to a lender directly.
Well over 90% of all intermediaries offer not only breadth of choice but full advice. Merely one third of all lenders can offer advice in this way and none can offer the same breadth of choice that an intermediary can.
Intermediaries should work hard to help customers to understand this, where research shows many simply don't. This would result in better informed and happier customers.
6. Advisers to help borrowers to make the right choices and fix
Identify the 1 in 3 borrowers that would now pay up to £1200 more to fix their mortgage rate, and fix them. Rates are at an all time low, there has arguably never been a better time to broach this discussion.
7. Industry should make both children and parents aware of all FTB options
Typically it's children who explore the guarantor options and most are not aware of what products might exist today.
This is a market that the likes of Aldermore and Nationwide Group are working hard to help and more innovation is expected this year.
Intermediaries and lenders all have clients in their 50s and 60s and should proactively clarify what options they might have to help their children onto the property ladder.
8. Borrowers look to overpay your mortgage or offset it
The fortunate few who have spare cash could do a lot worse than to reduce their mortgage debt.
Banks could do with the money back, overpayments represent a guaranteed return usually at rates far better than retail savings rate and of course any borrower that does this will increase their equity and put themselves in a better place for future moves.
Check Ts and Cs with your lender and remember once overpaid you might not be able to get your cash back.
9. Homeowners take advantage of a low Bank Base Rate
Most experts predict BBR will stay at 0.5% for many more months yet. What is your plan if you are benefiting from this? Are you simply going to spend any extra cash, or can you save lots for future moves or home improvements.
If you are able to, now is a good and cheap time to secure reduced-cost labour on home improvements, thereby increasing your living standards and house value and spreading your wealth to other sectors that might need the extra work.
10. Lets all talk the economy up, or at least emphasise the positive
Nobody wants to kid a kidder or constantly falsify how good things are, however there is a balance. Bad news has been trending now for four years or more and sooner or later consumers and businesses look for good news and grow tired if not immune to grim headlines and results.
Let's all make a point of more widely covering the good news and contributing to the UK economy and housing markets getting back onto their feet again - this cannot happen too soon, and at least we'd all feel better.
