Homeless charity Shelter and mortgage lenders have angrily crossed swords over the need for reform in the housing market.
Lenders hit back after Shelter accused the Government of pandering to the banking industry. It called on the housing minister to 'stop bowing to the banking lobby'.
Shelter called for sweeping changes after a YouGov survey found that first-time buyers want ultra-careful lending – even if it means they won't get a mortgage.
The survey found that 84% believe lenders should only lend to borrowers who can prove they can afford it. Threee quarters, 75%, said banks should ensure borrowers have enough cash to pay the mortgage once all other costs have been taken into account.
Over one-third, 38%, said banks could not be trusted to lend responsibility in the future and 28% said they had been offered a bigger mortgage than they had asked for, or knew someone who had.
However, first-time buyers cited sheer affordability, rather than mortgages, as their main problem: 53% said it was the high cost of homes that was stopping them buying.
Shelter chief executive Campbell Robb said: "This survey shows people really want simple common sense rules in place to ensure people borrow money responsibly. What is most striking is the level of support among first-time buyers who clearly want greater protection and are well aware it might limig their chances of getting mortgage credit in the future.
"So far, the voice of the consumer has been completely drowned out by the mortgage industry, when in reality it is this very group who most recognise the need for stability in the market. We must not let banks go back to the old ways of irresponsible and reckless lending."
He added: "It's high time the housing minister stopped bowing to the banking lobby and ignoring the advice of economic experts and consumers who have sent clear signals that mortgage lenders need to clean their act up."
But the Council of Mortgage Lenders hit back at Shelter, saying that its concerns were nothing new, and that it agreed with responsible lending practices.
It expressed surprise that “Shelter seems unaware that mortgage lenders do, in fact, support reform. However, it is the detail of that reform that needs care if undesirable and unintended impacts are to be avoided”.
The CML also agrees with another Shelter finding, that the Government should listen to consumers, as well as lenders, on housing issues.
Last year, it pointed out, the CML funded independent research among consumers, which found that consumers were torn between wanting tighter regulation whilst not wanting to see borrowers unnecessarily excluded from home ownership.
CML director general Michael Coogan said: “Far from bowing to the banking lobby, as Shelter puts it, a measured approach from regulators and government is simply good sense in a market where there are as many risks from too much regulation as from too little.”
But Matt Griffith, of first-time buyer group Priced Out, said: "First-time buyers have borne the brunt of loose mortgage lending in the past. Loose lending has driven house prices to sky high levels and first-time buyers have too often been expected to take unacceptably high financial risks when trying to get on the ladder.
"We expect the Government to protect us from irresponsible lending and make sure our interests are put before those of the mortgage lobby."
%20-%20IMAGE%20Client%20Accounting%20%E2%80%93%20what%20are%20your%20options.jpg)
Comments
Brit1234: Like I said - no-one puts a gun to anyone's head. ANYONE who takes out a loan or finance; who invests in stocks/shares/bonds/gold/pork-bellies/whatever is gambling. Some you win:some you lose. Property is first and foremost a roof over ones head. The ONLY question here should be "Do I want to live in a property I own, or someone else?" If the answer is "I own" - then you pay the money to the lender. If it is "someone else" - then you pay THEIR lender - and a bit of profit thrown in to your landlord for good measure.
Your choice. Don't ask for your hand to be held.
RE Peebee "Someone puts a loan deal on the table that ties you in for ever - then you make your own decision.
That's what being an adult is all about."
Yes but there were lots of stupid and desperate adults in the rise of the big bubble who gabbled. Remember all those who lied about their incomes on self serts, some 40% of mortgage transactions, then all those with 95-125% mortgages.
No we need sensible lending even if it means a few less transactions for Peebee.
Today's headline on BBC News - "Food prices 'will double by 2030', Oxfam warns"
In India, people already pay the equivalent of £10 for a litre of milk.
Looks to me like house prices are the LEAST of our coming worries...
Brit1234: Look - if you can't control your own destiny why the Hell do you think that others should hold your hand for you and a whole generation like you?
Someone puts a knife in front of you, you know not to go off on a stab-and-slash-fest... don't you?
Someone puts a loan deal on the table that ties you in for ever - then you make your own decision.
That's what being an adult is all about.
Peebee the time to buy gold was when it was $400 per ounce rather than $1500. However if the US considers quantitative easing again it might be a option. That or get shares in Junior minors.
Why are you so upset that first time buyers want responsible lending?
Is it because your business needs to be in huge unnecessary debt?
People are waking up and as future generations of FTBs come through with huge uni debt the last thing they will want is huge house hold debt as well.
I will buy when I am good and ready, in the mean time my deposit will get bigger.
Brit1234: "As a first-time buyers I want ultra-careful lending. "
Look, pal - if you can't be trusted with your own finances maybe you shouldn't be thinking about buying a house.
Oh - of course - you're not, are you? Good on you. All nice and responsible.
Why don't you put your deposit money into gold, like Mr Hicks recommends? Might even grow it into a deposit big enough for the house you currently can't afford... ;o)
Who do these selfish FTB's think they are?
Listen to me, it is your duty to take on unmanagable levels of debt in order to protect the value of my house. Don't worry, there'll be some other mug along after you to do the same. That's how our pyramid works. Prices rise forever and we all win. What could possibly go wrong?
RE Brit12345 "Perhaps the charity Shelter should use its donated funds to help the homeless not not waste money to play politics"
Maybe not, if house prices were cheaper there would be less homeless people.
As a first-time buyers I want ultra-careful lending.
PS Who is the imposter?
@peebee
glad you agree it is a rip-off...no doubt it is...don't apply for it...buy mortgage free.
I'm not sure it's that simple Pee Bee. Imagine if people could borrow any amount they wanted to, with risk assessments irrelevant. House prices on an identical street of property would then be set by whoever was prepared to put themselves in most debt. Once someone has paid the money, then that's the level all the other identical properties rise to, regardless of whether that one borrower can actually meet the payments or banks have enough money left to lend to others wanting to buy there. How far were we away from such a scenario in the run up to 2007? Even more importantly, how far have we moved from such a situation now?
Non-insulated wall: "no, credit's not an addiction...it's a rip-off"
A "rip-off" which NO-ONE is forced to apply for.
Your argument is as empty as your cavity. Suggest you take steps to improve your u-values before posting...
SBC - Sshhh! You'll give the game away ; )
RnR, i'm not entirely sure you're not being facetious there?
Let's face it, with transactions at half their peak levels, we're already witnessing a buyers' strike. The crucial point (which would be nigh-on impossible to quantify) is how many of the 40k-odd less transactions per month are electing to stay out of the market or are prevented doing so by current lending criteria.
As for the Facebook campaign, i'm already on it for what it's worth but i'm reasonably certain the economy will do our bidding without new-fangled media pressure groups...
Surveys can be easily manipulated to produce whatever result is desired by the originator.
Really, who would say "No" to the quoted question "Should lenders only lend to borrowers who have proved they can afford it?". That is a very different question to "Should there be widespread restrictions on lending to minimise bad debt, regardless of the social and economic costs elsewhere?" - yet the answer to the former is implied as being in agreement with the lattter.
FTBs have been raising the possibility of them 'going on strike', with Facebook campaigns to raise awareness etc of their claims to be 'priced-out'. What would such a strike look like and how would it show up in housing market data if it took hold?
Local Agent, I read those findings and came to a slightly different conclusion.
The majority of FTBs have seen exactly how cheap credit correlates with inflated house prices. By requesting strict mortgage restrictions they know that prices will find their true level. Sure, in the short term they recognise it excludes them from the current property market but in the long term if is to their (and the majority's) benefit.
In fact, these findings undermine the VI's faux hand-wringing calls for the banks to get lending again to assist the poor, priced-out FTBs. Er no, actually, you can take your unsustainable debt burden and shove it where the sun don't shine.
"so basically, first time buyers are wanting a restriction on lending to set a false limit on prices so they can get on the ladder. i am sure they will feel exactly the same when they come to upsizing!"
To be fair, that's probably a subconscious projection of your own moral compass.
no, credit's not an addiction...it's a rip-off
@vocal agent
"so basically, first time buyers are wanting a restriction on lending to set a false limit on prices so they can get on the ladder. i am sure they will feel exactly the same when they come to upsizing"
exactly, and when making the next step on the ladder the price gap will be easier to fill due to lower price levels
So, Matt Griffith says "We expect the Government to protect us from irresponsible lending and make sure our interests are put before those of the mortgage lobby."
Pity you publicly state you and the group of people you purport to represent can't wipe your own noses, Mr Griffith...
Credit is NOT an addiction. YOU control it yourself!
@Brit1234
There you are - you can count to 5! ;>)
Perhaps the charity Shelter should use its donated funds to help the homeless not not waste money to play politics
so basically, first time buyers are wanting a restriction on lending to set a false limit on prices so they can get on the ladder. i am sure they will feel exactly the same when they come to upsizing! if you dont wannt borro then dont! live somewhere cheaper instead, like the rest of us, rather than moaning cos it is too expensive where u want to live.