Stuck on the ladder
It now looks as if the housing market is continuing to flatline, if the results of a study by Lloyds TSB are to be believed.
Not only has the tougher conditions for getting a first-time buyer mortgage become prohibitive, but those who now want to move up the property ladder are finding it just as difficult.
According to the study, one in six of those hoping to move up the ladder now has to turn to the bank of mum and dad for assistance – on average a whopping £13,000.
Under current market conditions, no longer is equity built up in the first home enough to reduce the loan to value of the second property.
The situation is made worse by conflicting messages coming from Whitehall and Canary Wharf: one wants to stimulate the housing market, while the other has a Stalinist view that unless homebuyers can prove they would be able to afford their repayments in the near, medium and long-term future, then it would be bad business for lenders, usually highly-trained and prudent organisations, to advance them any loans.
It is an unsustainable position since, given the uncertainty of the jobs’ market, a person could honestly apply for a mortgage knowing he could well afford the repayments, only to find himself out of a job within months.
Equally, as we have said on a number of occasions, it is not for the state to tell legitimate businesses how to conduct their affairs, if they do so legally and ethically.
Homeowners make choices about how to allocate their take-home pay. Some people may prefer to dine out at expensive restaurants every week, while others may prefer to tighten their belts and pay off a bit more of their mortgage loans.