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May 2020 | Buy-to-Let

Bob Young: Don’t discount the statistics

Bob Young is chief executive officer of Fleet Mortgages

There is clearly a great appetite for statistics and data analysis within, and around, the UK housing and mortgage market, simply because of its importance to the UK economy and plc as a whole.

That importance has, however, often led to such a glut of data, with so many different methodologies, that it has been difficult to sort the wheat from the chaff when it comes to the true picture of what is happening in the market.

There is such a high number of research pieces released during any given month – in normal times, at least – which provide different and often contradictory results, that it is difficult to work out what is actually the truth.

BIG DATA

Given the current situation around COVID-19 and what it means for the housing market, you might think that data is more important than ever.

However, recent statistical analysis has tended come from a pre-COVID-19 market, making it appear like some sort of anomaly given today’s vastly different environment.

That’s not to say that we should discount this data. After all, if we’re talking about the strength of transaction levels or house price growth back in February, this can’t be viewed as ‘false data’, it just perhaps reveals how quickly things can change.

But it also might point to where the future could lie once lockdown is relaxed and we can begin to move the market forward, particularly when it comes to the re-introduction of physical valuations, which should provide a significant boost.

January and February 2020 might already seem like a long time ago, but I’m positive that the market can get back to a similar position in a relatively quick space of time; it just depends at what point in the future that journey can begin.

Some commentators have called for indices and datasets to be suspended during the current crisis. I can see the merits in this, but the demand to know exactly how COVID-19 has impacted the housing and mortgage markets will be incredibly high. Who could be expected to miss out on that PR opportunity?

LIMITATIONS

The argument for pausing indices and datasets during the crisis is that, for one, the low level of activity renders analysis statistically unviable.

We can’t compare apples with apples, because there’s not enough apples available at the moment to make such a comparison.

There are also those who say that the publication of such data may only result in an already spooked marketplace becoming even more worried, and that this ultimately leads to an ever-decreasing circle approach.

In other words, that we would be somehow complicit in making an already bad situation worse. There are some, I’m sure, who feel very strongly about this.

My own understanding, at least according to UK Finance’s calendar of upcoming data releases, is that its Mortgages Trends data and Household Finance Review have not been scheduled for release over the coming months.

This may well be a decision based on the above factors, perhaps most obviously around how confident, or otherwise, the trade body can be in the data it’s getting. Indeed, the entire lending community spent a good deal of time during March and April focused on one thing alone: helping borrowers secure mortgage payment holidays.

Can we really say this was a normal period of day-to-day lending? Would the figures for activity during that period lend themselves to any positivity about what might be happening now?

I doubt it. I can therefore understand the arguments on both sides; this is such a unique situation – or so we hope – that it perhaps doesn’t bear comparison with the previous quarter, or this time last year, for example.

And yet, the reality of the situation is that the data we’ll see covering this time will be ‘real’, because this is the market right now, even if it looks completely different to anything we’ve seen for over a decade.

What we might have to do is look at this period in isolation, or in the context of a post-lockdown environment. I’m not one for making predictions, however I think we must all expect the drop to be severe but the bounce to be quick and significant.

There is of course plenty that can happen between now and then, but it would be very surprising not to see a positive and sharp turn-around in fortunes when the green light is given.

We’re certainly planning for this, and I’m sure advisers are doing similarly. The data will be what the data will be; the most important point is to survive this period and be ready to hit the ground running as soon as we are allowed to.