"Certainly, there will continue to be a degree of trepidation in the housing and mortgage markets as we await the next MPC meeting and decision."
I ask the question because – and the markets seem to back this up – there seemed to be an inevitability about rates being cut last month and yet by a vote of 8-1, the decision was made to keep them on hold. Indeed, Mark Carney himself chose to hold which suggests that, once again, ‘events, dear boy, events’ in a political sense might have been a determining factor.
That said we could see some notable and sizeable decisions in August, especially given the fact the MPC will have plenty of inflation and growth data to chew over. While we might not be 100% certain about a cut – and who could be? – one suspects that action of some kind will be taken, especially when the newly-installed Chancellor, Philip Hammond, began his tenure with comments suggesting he felt the economy would slow in the coming months.
Undoubtedly, we have seen a calmer picture emerge in the last couple of weeks, certainly when compared to the days after the referendum. A steadying of the ship was asked for, and the political powers that be appear to have delivered in double-quick time. Things move fast in our lives, but perhaps nowhere near as fast as in the corridors of Westminster.
Certainly, there will continue to be a degree of trepidation in the housing and mortgage markets as we await the next MPC meeting and decision.
The share prices of house builders were poised to be boosted considerably by a cut to BBR, but that has yet to materialise. In the lending world, we appear to be caught between two stools with some lenders, notably in the buy-to-let sector, cutting back on their higher LTV lending, while in the mainstream space others have been cutting rates on their 90/95% LTV products.
Within all of this, there may be further hope for first-time buyers. The CML’s latest lending figures for May suggested a notable upturn in lending activity, and there have been some calls for an extension to the Help to Buy 2 Scheme. It will be interesting to see the reaction of Scheme members if this is the case given that some have already pulled out of offering HTB2 loans, and more were to follow in the coming months.
An extension may not actually turn-around the level of high LTV lending which has been falling in recent quarters. Lenders hopefully have the appetite to continue lending in this space and clearly, judging by Theresa May’s speeches, the Government will continue to prioritise first-time buyers. A HTB2 extension might therefore be unnecessary and instead we might move to a private mortgage insurance arrangement for those lenders who want to be active and mitigate the risk. Now is perhaps the time for the sector to stand on its own two feet and wean itself off Government/State support.
