This year looks as if it will see an incredible transformation of the retail finance space, led by the mortgage market review and, from April, pensions freedom.
The tightening of lending criteria imposed by the City regulator have also led to some lenders taking a more forensic approach to would-be borrowers.
It is never nice to say we told you so, but five years ago we suggested that lenders should take a closer interest, not only in the credit worthiness of the people who asked for loans, but equally in the environment in which the property is situated.
It was clear then, and even more so now, that the physical and social environment in which a costly property is situated will have a profound influence on its value.
In valuing a property it is important to look at the suitability of the bricks and mortar, but it is also important to look at the rubbish in the streets, the dumped mattresses and refrigerators, the graffiti, the drunks and uncontrolled young men and women hanging about, to get a proper picture of the true social worth of the local community.
Financial Adviser said this all those years ago and was dismissed out of hand, but this too is as important in making a loan as is financial affordability. We know, from hard evidence, that a number of young professional people, articulate and organised, can put pressure on the local authority and police to improve the environment and attack anti-social behaviour.
All these and more should be of interest to lenders since, at its very basic, they are protecting their investment. It also gives powerful support to homeowners who want to protect their family homes – and the asset that drives many of their retirement incomes and their children’s inheritance.
Pressure from lenders for local communities to clean up their act will also impact local authorities in many ways.
It may lead to a few disappointments, in that people who want to buy in run-down areas may be refused, but the medium and long-term advantage will be an overall improvement.
