Ray of light for property market

As readers of previous blogs will know, one of my main concerns is the lack of support for first time buyers in the property market.  This is primarily due to lenders tightening up their lending criteria and refusing to break the 90% loan to value rule.  I was pleased to hear from contacts in the USA that the housing market there is starting to show signs of recovery and the banks are now providing 95% and 97% mortgages.

I have been in discussions with a major High Street lender regarding a variety of mortgage products and I am delighted that due to those discussions we can now launch the Blackadders Deposit Match Scheme.  In practice, this means that if we are able to reach a deal on a property for at least 5% lower than the Home Report valuation the lender will class this as a 5% deposit requiring the purchaser to fund a minimum of a further 5% and thus treating the deal as a 95% mortgage.  This product is available for all purchasers although I do think it will be of particular interest to first time buyers. I think that this will start the release of the housing chain and will be a welcome development for purchasers and sellers.

This is a very exciting development and one that I believe will mark the beginning of an improvement in the housing market.   As I have mentioned before, to get a self sustainable property market we need to get the number of first time buyers over 40%, i.e. the number of first time buyers in the market needs to be more than 2 out of 5 of all purchases. This scheme will assist those who have small deposits or those who require to retain funds to pay for home improvements or contribute towards the purchase outlays such as stamp duty.

This is another exciting initiative that we are delighted to be part of and shows our commitment to getting the housing market moving.

I will report on the success of the Scheme in further blogs but in the meantime should anybody require further information then please do not hesitate to contact either myself or another of the Blackadders Property Team on 01382 342222.

Lindsay Darroch
Head of Property Services

Don’t break up the banks

I was pleased to read John Cridland’s (the new Head of the CBI) comments against the break up of the UK banks.  A break up of the banks would put Britain at a competitive disadvantage with those jurisdictions which prefer to leave the banks intact.  Anything that weakens the banks weakens the economic recovery and as such will weaken the housing market.  We need to get the banks lending more money to SMEs and also supporting the housing market by increasing mortgage lending – in particular to first time buyers.

I hope the politicians will not jump on the populist bandwagon of bashing the banks and instead turn their attention to supporting the economy through this difficult period.

Lindsay Darroch
Head of Property Services

Are responsible lending restrictions going too far?

I welcome the comments by the Head of the National Association of Estate Agents voicing his concerns regarding the Mortgage Market Review (MMR).  Readers of this blog will know that for the past 18 months I have advocated strongly for Government action and support to force lenders to increase the amount of lending to enable all prospective purchasers and first time buyers in particular to get onto the housing market.  If the current proposed restrictions are applied, more than 150,000 purchases each year will not take place and this will hit first time buyers heavily.  This will have a huge knock on effect.  I will keep you updated in respect of these proposals.

Since writing this blog, Prime Minister, David Cameron has now spoken out against plans to clamp down even further on mortgages in the name of responsible lending.  Mr Cameron had indicated that lenders have already gone too far in preventing good risk buyers from accessing mortgages.

The Housing Minister Grant Shapps, who is due to meet the FSA during the course of this week in respect of the MMR proposals, has himself indicated that he would have failed to get a mortgage under the new proposals.

I am delighted that the Prime Minister and the Coalition Government are taking this matter so seriously as the housing market is fundamental to the whole economy.

I will keep you updated.

Lindsay Darroch
Head of Property Services
T: 01382 229222
E: lindsay.darroch@blackadders.co.uk