First time buyers have reached the top of the Treasury agenda, placing them closer to home ownership than ever, provided nobody mistakes an agenda for a house.
The Treasury announced a roundtable for 10 September, bringing the new Economic Secretary and Housing Minister together with major banks to discuss mortgage reform and ways to increase home ownership. The invitation was ready. The reasonably priced two bedroom terrace remained mysteriously unavailable.
Recent regulatory changes were expected to let lenders offer more mortgages above 4.5 times a buyer’s income, within safe and regulated limits. The government said the changes could help up to 36,000 additional first time buyers in their first year. This is excellent news for those 36,000 people and a useful reminder that a policy can count its successes before anyone has found a front door.
Bank statements promoted larger loans, smaller deposits and new mortgage products. Barnaby, Head of Aspirational Keys at the Mortgage Imagination Council, welcomed the innovation. “We have replaced the deposit with a smaller deposit wearing a fintech badge,” he said, before unveiling a forty year mortgage that becomes emotionally affordable during the borrower’s second reincarnation.
The announcement linked the mortgage changes to plans to build 1.5 million homes. This is an ambitious attempt to solve a shortage by improving the borrowing capacity of people who have not yet found the property they are expected to borrow against. Somewhere, a calculator is being applauded for its can do attitude.
Increasing credit may help some buyers who can already demonstrate affordability. It cannot manufacture homes in the places people need them, reduce rents by administrative optimism or persuade a cupboard beside a dual carriageway to become a starter flat because an estate agent has called it bijou.
The lenders were invited to make first time buyers their top priority. No first time buyer was quoted in the announcement, perhaps because anyone earning enough to attend had been sent to another meeting about surviving the rent. The banks can now put buyers first while processing their applications in the traditional order, which is behind the collateral.
The property ladder is offering a remarkable new product. Every rung is available, the borrowing period is getting longer and the house at the top has been converted into paperwork. The agenda itself now qualifies for a mortgage because it has space, no visible structural cracks and absolutely no chance of being built.
Real story: HM Treasury.
