The house building industry has been having ’secret’ talks with mortgage lenders according to the Times (Tuesday 31 May) and yes I actually read the hard copy.
Why these talks are ’secret’ we can only guess, but the Times has a two page spread on the issue, so perhaps not that secret after all. The story is well known, house builders say they need to build around 230,000 new homes per year and at the moment they are only building around 100,000. This they say is largely down the banks making it nigh on impossible to get a first time mortgage.
So a pow wow ensues and we are told that there are positive signs from the meeting. Call me an old cynic, but if the banks won’t listen to government or the public at large, why will they listen to house builders? Possibly because being of the greed culture the house builders have dangled some carrots. One suggestion reported was that house builders would inject equity into a central fund that which would be used by banks to underwrite mortgages for larger amounts, such as 95%.
Whether such a fund could work is debatable. It would of course depend upon which house builders came to the party. Securing agreement with many different contributors would, I suspect, be very difficult. The Times rightly points out that not all are in favour of allowing 95% mortgages in any event and thus banks may actually not be that keen when broaching the subject with their economists. The think tank, the Institute for Public Policy Research has indicated that mortgages should be capped at 90% to avoid any more bubbles.
One thing is for sure however that it is increasingly difficult for first timers to buy a property in this country. So why bother? We discussed this a few years ago and nothing much has changed other than it has got harder to buy. Seriously, why as a young person do I want to bother with buying a house? Well according to leading socioeconomists the new ‘Generation Rent’ which is being cultured is a very bad thing. Is it really?! Pension provision is put forward as an argument, which has some merit, but times have changed, property has changed and in 30 years time the world will all look very different.
I believe this is the beginning of a new property regime and how we will all live in the future. Look at many European housing models and rent, part rent, part ownership, consortium living is the norm. Is this the way we are heading, does it matter?
All I know is that I won’t be helping the little owlets with large deposits, but then how will I get them to leave the nest – this is the better question and I have a cunning plan:)