House prices up

House prices up, lending up, now 90% LTVs… the first stutterings of a recovery?

When Halifax announced a jump in house prices in January, many commentators thought it was an over-optimistic anomaly. Indeed, February’s house price figures looked like a reaction to this media cynicism with Halifax posting a much larger fall, seemingly overcompensating for the previous month’s premature positivity.

However, just one month later Nationwide posted their own rises. People began thinking the impossible - could this be the first stutterings of a recovery in house prices?

Recently released figures show an undeniable positive trend emerging. Although house prices are still falling, they are falling at a slower rate every month; new figures from the Council of Mortgage lenders show that mortgage lending rose by 4% from January to February, with a similar rise predicted in March.

Surely the icing on the cake has to be the announcement from the HSBC last week that, as of April 14th, £1bn of new mortgage loans will be available to new customers at 90% LTV. This is part of the £15bn of funding that the bank pledged last year.

The new products will include a two-year fixed rate product at 4.99% with a £1,499 booking fee and a two-year fixed rate of 5.49% with a £199 booking fee. A lifetime tracker will also be available at 4.59% (currently) with a £999 booking fee. All three products are available for home purchases only.

The story was all over the papers last week, probably the product of a broad, co-ordinated PR campaign designed to attract tentative new customers back to the market.

All great news, I know, but there’s something that’s troubling me.

Why is the first bank to offer the affordable products that homebuyers are craving one of the only big lenders NOT to accept government funding in the great bank bail out?

I believe that the most effective way to kick start any significant recovery is to encourage banks to offer more realistic LTV products – around 90% or less – with significant financial backing that would force the other banks to fall in line and offer similar affordable products, unlocking the pent up demand that so many of us see every day.

I was under the impression that our taxpayer monies which were so eagerly accepted by the likes of Northern Rock, RBS, Lloyds TSB and HBOS would give us some kind of sway over lending practices.

Why has it taken one of the few non-government banks to start the ball rolling?