You can’t solve the market with disjointed initiatives
Peter Williams is executive director of the Intermediary Mortgage Lenders Association
Upon its introduction, the Funding for Lending Scheme provided a much needed injection of optimism at a time when there was little prospect of a rise in net lending for mortgages and small businesses.
Clearly the fact that today’s figures show a fall of -£0.3bn during the first quarter of 2013 across the scheme’s 40 participants might be taken to suggest the aspirations for a full lending resurgence are far from being met, especially in the small business sector.
However it is a mixed picture as the Bank of England’s report shows. Some 27 lenders increased their lending while 13 reduced and this includes some big players such as Lloyds Banking Group, Royal Bank of Scotland and Santander.
On balance, credit conditions in terms of pricing and availability have improved under FLS and recent trends in mortgage applications and approvals suggest we can still expect further improvements in 2013. But it remains a scheme with a limited lifespan (January 2015) which, on its own, is not enough to fuel recovery. No matter what positive changes we see to gross and net lending in the months ahead, the question of ‘what happens next’ still remains.
The FLS will be joined by Help to Buy Mortgage Guarantee scheme to assist higher loan to value (LTV) loans in January 2014 – so for one year we will have an even stronger boost. On that basis we can be reasonably optimistic about the market in the short to medium term.
Beyond the unused capacity for lending in FLS, we are concerned about the ‘gaps’ in government thinking when it comes to thinking long term about the housing and mortgage markets.
Beyond the challenge of economic recovery, there are underlying issues around access to home ownership and the long-term structure of the mortgage market that cannot simply be addressed through the current disjointed initiatives.