April 24, 2012

Brian Murphy is head of lending at Mortgage Advice Bureau


There was a full and frank exchange of views at the Great Housing Debate last week, with mortgage and property experts coming together to discuss the different perspectives on the state of the UK housing market.


Key among the topics under discussion was the launch of NewBuy. The panellists – which included representatives from lenders, brokers and market commentators – were undecided on NewBuy, which is something that is mirrored across much of the national media at the moment. It launched to great fanfare but after just a few weeks there are questions being asked as to how successful it has been.


As a broker who is involved with NewBuy, MAB – through its specialist arm Mortgage Talk – is, unsurprisingly, a strong supporter of the concept. Indeed, we were the first mortgage broker in the UK to complete a NewBuy mortgage this week – around a month after launch. As such commentators need to remember that it takes time for any new idea to take-off, and with NewBuy potential borrowers are still choosing which house they want to buy.


From our point of view enquiry levels have been very high but it needs a few more months before anyone can properly comment on the popularity. Our only suggestion at this stage would be to say NewBuy needs more lenders to take advantage of the reduced risk to get involved and to offer competitively priced products if it’s to fulfil its potential.


We would agree that NewBuy is not a panacea for the entire mortgage market, but it is a complementary product that sits well alongside other product offerings for borrowers with small deposits such as social housing and general high loan-to-value products offered to the mass market. 


Together with existing work being done by the mortgage market NewBuy will have an incremental benefit; it is not detrimental to borrowers who take it up, and it will increase the housing supply which will stimulate the construction industry too. Therefore, it needs more time to ‘bed in’ before people look to knock it in the media.


Too many media commentators are looking for indicators which suggest the market is either going to collapse or return to the boom times. They like to deal in absolutes, where any positive signs of growth are heralded as the start of the boom times again, and anything that isn’t positive is a precursor of the next crash. This coverage is not helpful for consumer confidence.


Generally speaking, house prices have now stabilised and the level of construction remains low relative to demand. And despite the financial crisis people still want to buy property, so taking all this into account over the next few years the market is likely to see slow growth – with fluctuations – and any innovations that have a positive impact should be applauded.

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