Wednesday, 24 July 2013

HELP TO BUY

The government's flagship initiative Help to Buy has attracted "mixed" reaction even before it is launched next January.Heavyweight commentators like  the former Governor of the Bank of England and the chairman of the influential Treasury Select Committee have expressed reservations. I know my own concerns don't carry that kind of punch but it still feels like we are trying to solve a housing supply problem with a demand-stimulus. That risks a future house price bubble and affordability challenges for many borrowers in the years ahead and  at a time when interest rates could well be rising. We simply don't build sufficient new homes in the UK and until that is addressed, then such initiatives feel far too tactical and headline-grabbing. I'm also convinced that if the large banks had followed the example of the mutual sector and continued to lend to furst time buyers in recent times then a government-underwritten  scheme would not be neccessary. Building societies like The Hanley  never evacuated the first time buyer market as we have always recognised that customers with modest deposits are a key link in the lending chain. Over the past year our lending to borrowers requiring a mortgage of 90%+ LTV has shown a substantial increase and we are able to do so prudently and within our own risk-appetite , therefore participation in Help to Buy is not essential for us. The devil is in the detail of the scheme and we will undoubtedly keep it under review but an absence from the list of lenders using Help to Buy is certainly not any kind of signal of a reluctance to lend to first time buyers. On the contrary we are already doing what this scheme is encouraging lenders to do, and therefore we'd need to be persuaded that there are  clear benefits in changing runways when we have a perfectly sccessful  flight path already.          

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