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07th February 2014
At a conference last week I spoke to many based outside of London and in the North about their experiences and I must say, I understand why it is so galling that the basis of all property news seems to be London centric. It is very important for everyone, us, the media and economic strategists to remember that it ain’t all about us.
To this end I am delighted that we have a really interesting and important, guest blog from Christopher Barker, (@Gummo31) working hard to promote independent advice and help clients in a very different environment.
Over to Chris…
‘House prices 17.2% up’ was the headline in the good old Daily Mail.
While on my way down to my first Mortgage Advice Bureau conference in Leicester, this headline forced me to check the date on the front of the paper. Had I boarded a time machine this morning instead of the 7.43 from Leeds? Have I gone back in time to 2005/6? It seems not!
When reading the rest of the article, the 17.2% was actually the increase from last year in the small borough of HACKNEY in London! The paper went straight into the bin and I proceeded to persevere with the flappy birds on my phone. The Daily Mail had made me more angry than the most frustrating game on smart phones that is currently doing the rounds!
The issue is that many will read this headline and believe that this applies to every home in the UK. Well, I can assure you where I trade, prices have not increased for several years and will not be doing in the short term.
For the last 3 years I have worked in the old mill towns of Blackburn, Burnley & Rochdale. Places of high unemployment, very low house prices, low incomes for those that do work and low confidence for the current government and their current policies (don’t worry, no more politics). The housing market is pretty much the same as it was a year ago. The same will probably go for similar towns throughout Lancashire such as Bolton, Bury, Wigan, Preston and Warrington.
The enquiries coming through are still from the same people, in the same jobs, on the same salaries. There has been no influx of people with stacks of money with nowhere to live fuelling the demand in the area. There are no high net worth bankers, lawyers or accountants where they can afford to offer whatever they have to get the property they want. This is reality, not London. Even Boris has publically said that London should not be part of the rest of Britain, it’s a place on its own. I agree.
Speak to local independent Estate Agents in the above mentioned towns and they will paint the real picture. There is no bubble outside of London and there won’t be in the future. Lenders have not relaxed criteria to make mortgages easier to come by. People’s incomes are stagnant and inflation is still around 2%.
If house prices increased who would be able to afford them? Certainly not my clients. Clients are still having to increase mortgage terms to make them affordable. I see more 30 and 35 year terms than anything else. If house prices do rise are lenders going to offer 40/45 year terms or increase their affordability calculators?
All of the above is not supposed to be negative. I am glass half full kind of guy. It just becomes frustrating to read in the news of events that are not taking place in most of the country.
Placing mortgages is still as tough as ever, I don’t think that will matter where you are in the country. I would say though that due to job cuts, ridiculous energy price rises and reducing industry in the north, people’s belts are constantly being squeezed and are more likely to miss credit card payments, mobile phone bills and go over their agreed overdraft.
Putting food on the table will always be the most important thing for a family. I have had instances were clients have had to prioritize where their money is going and have had to miss payments due to losing jobs or illness. Or they have had to seek help from payday lenders to get them through to the end of the month, again for reasons beyond their control. Mortgage payments were always paid though and will continue to be paid, as no one is going to want to lose their home.
I understand lenders have to be vigilant, but I think it’s about time they looked at individual circumstances rather than generic tick boxes.
Banks are refusing to lend to good honest people due to a historic anomaly on their credit report, caused by a faltering economy. Let’s not forget it wasn’t honest hard working people from up north that caused the country to go into the last recession. Why should Mr Smith, (who was made redundant from the welding company he worked for for 10 years which closed down due to a slowdown in trade and funds not being available from the bank to help their cash flow due to the crash), be penalised.
He missed 6 credit card payments while he was out of work for 12 months but has now found himself a job with a regular income and is on top of his finances. He still made sure his mortgage was paid but now he can’t buy a bigger house to support his growing family. He has the deposit money but can’t secure the lending he requires. Mr Smith will no doubt be forced into renting. It just doesn’t make sense.
This is the reality, this is what I see on a weekly basis.
Confidence in the market is growing, no doubt down to some positive noises made towards the end of last year. But there is no boom and the last thing people from the north need is the banks to start increasing rates to try and slow down the market.
I am afraid that the North / South divide is growing ever larger.
This is Bow, he’s a plucky little Boston Terrier and knows a thing about mortgage applications. His owner, Patrick, is one of our clients and Bow here helps with his paperwork. If there’s anything you need to know about mortgage applications or the paperwork entailed then check out our advice hub – it has everything you need!View the mortgage guides
Andrew Montlake, Director and Spokesperson for Coreco, gives his honest and forthright views on the mortgage market, economy and all things property related. Monty was voted "Mortgage Personality of the year 2008", "Best Press Spokesperson" in 2011 and is the current holder of the British Mortgage Awards “Best Marketeer” title. Expect expert analysis, delivered in a down to earth style with a side helping of exuberance.