Mortgage lending has fallen to smallest level since 2020
Mortgage lending to both first-time buyers and home movers recently fell to its lowest level since the spring of 2020, when the housing market was largely closed during the first COVID-19 lockdown, according to UK Finance data.
On the back of that report, Mortgage Introducer reached out to brokers to find out how they think mortgage lending can be stimulated.
Stimulating the market
Graham Cox (pictured), founder at Self Employed Mortgage Hub, said to stimulate mortgage lending, house prices must be allowed to fall - nothing more, nothing less.
“We do not need Help to Buy, Rent to Buy, Miras, stamp duty holidays, shared ownership, mortgage guarantee schemes or any other counter-productive method of propping up prices,” Cox said.
Cox stated that while house prices are falling, the government will need to put policies in place to stop them from taking off again.
To achieve this, he called for house prices to be included in the 2% inflation target, more punitive taxes for second homes, holiday homes and foreign ownership, while relaxing planning laws, and allowing local authorities to build social housing at scale.
A good idea wasted
Some good ideas have already been put in place – however, their good intentions may be lost in the present landscape, suggested one director.
“Only in the UK could a groundbreaking product be released in the form of Skipton’s deposit free mortgage, just for it to be made completely unaffordable for clients,” said Mike Staton, director at Staton Mortgages.
Staton said the only thing he can see now that will stimulate this housing market is a change in government.
“There was widespread outrage when Liz Truss and co were in power and rates were up at the 6% mark previously - we are back there now, where is the outrage,” he questioned.
It is clear to see, Staton said, that inflation is not consumer driven, and that the country is being forced to pay ludicrous amounts on fuel, energy and food, all necessities.
Until this is brought under control, Staton cannot see a light at the end of the tunnel.
“The government need to get to grips with the real world; we all do not have the luxury of going home to our £2 million homes,” he added.
Austyn Johnson, founder at Mortgages For Actors, believes that positivity being reported in the news would help buyers dramatically.
“Currently, people are worried they cannot afford a mortgage, so they are not applying or even enquiring,” he said.
Johnson added that he has had clients so surprised at what they can actually afford due to misinformation.
“Lending would be stimulated if people had more confidence in the interest rates; we need a few months of stability to make that confidence grow,” Johnson said.
He believes that mortgage figures will stay around the same general area for a while, though he is optimistic for change come the new year.
Challenging notion
Jamie Elvin, director at Strive Mortgages, said skyrocketing interest rates have challenged the notion that housing market fluctuations are solely driven by supply and demand.
“It is evident that interest rates and affordability play crucial roles in shaping the housing market, too,” he said.
Currently, Elvin said lenders face limitations in offering competitive interest rates; however, he believes it may be worth lenders exploring additional options to reduce monthly payments and make borrowing more attractive for customers, which would improve mortgage lending figures.
These alternatives, Elvin said, could include more lenders offering longer loan terms – he has witnessed an increasing number offering deals for 40 years or beyond.
“Additionally, making interest-only lending more accessible as a short-term solution to certain borrowers could be considered,” Elvin added.
How best do you believe the mortgage market could be stimulated? Let us know in the comment section below.
