Echoing the thoughts of many finance experts, Prime Minister David Cameron voiced concerns that UK banks and building societies have taken steps ‘too far’ in moves that are stopping ‘good risk’ home buyers from acquiring a mortgage.
Mr Cameron warned that the housing market would not see significant improvement until the building societies and banks return to ‘respectable’ and ‘responsible’ lending. The PM emphasised that although the reactions to the credit crunch that had exposed borrowers with unsustainable home loans had been necessary, their actions had now gone too far and Mr Cameron vowed that he would work to get the housing market moving once more.
The Prime Minister stated:
“In a way the pendulum has now swung too far the other way. If you are a single person, you are earning a decent salary, you go to the bank or building society, you are actually quite a good risk, they won’t give you 80 per cent of the value, they won’t give you four times your salary.
“So we are working with them to try and say, look of course we don’t want to see the unsustainable boom of the past, but we’ve got to get proper lending, respectable lending going again.”
Head of the FSA (Financial Services Authority) Hector Sants had been summoned to explain the proposed new mortgage regulations that many ministers fear could further inhibit the mortgage market, making it even more difficult for potential buyers.
It is expected that Mr Sants will meet with the Housing Minister this week, Grant Shapps, to discuss what has been called the ‘overreaction’ to the mortgage market failings that became apparent in 2008. Some believe the FSA proposed rules may be somewhat over-zealous regulation.
At an event in Leicester last week, David Cameron acknowledged that the days of 120% mortgages and home loans offered on the basis of 7 or even 8 times salary earnings were not sustainable but he added:
“We don’t want another housing boom where prices rise out of people’s reach, but the housing market is a key part of the economy. You need a housing market where people are able to sell, people are able to buy, people can move to different parts of the country, people can go in search of that job they want or reunite their family.
“The housing market has become very stuck and we’ve got to get it moving again. So a proper conversation with the banks and building societies that stops the pendulum going the other way is important.
“We want a market that is moving, but not the unsustainable rise prices. That is what we are trying to deliver.”
Those undertaking CeMAP training with a view to entering the mortgage employment market will already have seen job opportunities increasing across the UK somewhat and this trend is expected to continue with the forthcoming changes.