Countrywide, the UK’s largest chain of estate agents and mortgage brokers, has repeated its call for compulsory lending targets.
Financial services director Nigel Stockton was speaking after the Bank of England’s decision to pump £80bn into banks on the condition that they passed the money on in the form of affordable mortgages and business loans. The loans, one of two liquidity schemes announced last week, could start to be released within days.
Stockton said the injection of money was very welcome but cautioned: “I will only start putting the bunting back out when I have seen how this is to be deployed.
“We have been on record for some time now calling for the introduction of mortgage lending targets which would benefit both the housing market and the UK economy.
“The market needs specific mortgage lending targets and increased gross lending targets. Without these targets, there is a real danger that this money will again be used by the banks for balance sheet management and not to increase mortgage lending.”
Estate agent Brendan Cox, managing director of Waterfords, which has branches in Surrey, Berkshire and Hampshire, said the money would only be useful if the banks loosened their lending criteria.
He said: “The success of this measure will be dependent on how it is governed and what stipulations are put in place to avoid the banking hurdles that house buyers have experienced over the past four years.
“It is encouraging that the Government is recognising that previous initiatives have had little impact, particularly when it comes to the housing market, but it is not just a case of providing more money: it is the criteria laid down as to whether or not someone qualifies for a mortgage that needs to be adjusted.
“While banks may now have more freedom to lend, if these measures are to have any real effect, they need to be made available to those with a 10% deposit.
“The acid test will be if, as a result of this extra funding, people’s desire to buy and sell property returns.”
Housing commentator Henry Pryor said he thought lenders would relax their demands for high deposits, and predicted more 90% mortgages. He said that as a result, more buyers would be competing for the limited stock on the market and house prices would rise.
He said: “Whilst prices in some areas are now down by more than 10% over the last 12 months, this dramatic move will add as much as 3% to average house prices across the country.”