Lenders are claiming government legislation that forces them to lend a certain amount to first time homebuyers will not help revive the lending market as fixed mortgages are not the solution to helping the housing sector recover. As part of a panel debate that took place at this year’s Mortgage Business Expo, head representatives from Precise, Lloyds, Paragon and ING all stated that there a wide number of factors that need to be considered before the first time home buyer market can recover, adding that government support will be needed.
Head of intermediary distribution for Lloyds Banking Group, Peter Curran stated that there is a lot to actually helping the first time home buyers outside of just making sure that the best mortgage rates are out there for them.
He added that it is also more than just reaching a lending quota or target each year explaining that instead it will require a mixture of government support, lending and offering more education to buyers to make them good candidates for a home loan. At the moment the first time home buyer market is stale with many choosing to rent instead of purchasing a home.
Precise managing director Alan Cleary stated that making commercial organizations orchestrate change will not work because there is no way to make lenders chase down first time home buyers because most will not do it unless they determine that there is some type of profit to be had in offering better fixed mortgages to customers.
Head of sales for paragon echoed the same sentiment stating that most first time home buying from the major banks is dictated by the perceived amount of risk and banks are not going to change their minds about what looks like a risky home loan.
Cleary went on to explain that in order for the property market to bounce back the government would need to create one housing policy that took into account the needs of all the stakeholders in a mortgage loan including the public and the banks.
He added that this is something that has not been done since the economic crisis first started back in 2007 stating that he hopes that it will happen when the government announces its new housing policy next week because the market does need to be stimulated desperately.