It began with some positives from the previous week; UK growth was confirmed at 0.5% in the 3rd quarter of this year and the Government launched its much anticipated Housing Strategy, pulling together a range of announcements with a couple of new ones to try to stimulate growth and return some confidence back to the house building industry.

Whether you agree with the content of this or not, the point is that at last the Government is trying to do something to help stop a housing issue become a full blown crises. It looks like there are two main strands to the policy, which is firstly set out to bring back some confidence, (key word that), to the house builders. For the most part they seem quite pleased with it all and let’s face it, if builders are not building at all there is not much hope for much needed housing supply.

The more contentious issue is around the so called 95% LTV guarantee. I have had more than a few twitter banters this week around this with some commentators and journos suggesting that this is creating a false market, lending to people who otherwise would not be able to buy and putting the taxpayer on the hook when it all goes Pete Tong. I disagree.

The reality is that the taxpayer is the last resort; it assumes all these buyers will not be able to pay their mortgages, slip into negative equity and subsequently get repossessed. The claim that they will take out loans that are not affordable is plain wrong. In reality the loans will only go to people who in a “normal” market can afford the monthly payments of a 95% LTV mortgage but are struggling to raise the “abnormal” levels of deposits.

If they can afford the loan at say 3.5 or 4 times income, (my guess is that it may be more stringent than this anyway), so what if they slip into negative equity? We have to get out of the view that a house is a short-term investment. For most, here’s a novel idea, you could always just live in it – it is a home.

If people are then forced to move for whatever reason lenders should be big enough to underwrite the reason effectively and work out a sensible plan. If I have a 120% mortgage, have no issues with the payments and need to move to a similar property in another area keeping 120% LTV, fine. It is affordability that should govern everything – get that right, with a sensible degree of comfort then issues will be fewer.

Whilst the Euro turmoil is starting to turn into a full-scale endgame with the markets becoming more and more convinced of an EU zone break up of some description, we may yet need our tin hats and bayonets. However, as an industry we need to welcome every little move made to try to improve matters.

Basically, Merv warned that failure to reform the banking system and remove the “too big to fail” assumption could easily lead to another financial crises. Cuttingly, he stated that over the past two decades, too many people in financial services had thought “if it’s possible to make money out of gullible or unsuspecting customers, that’s perfectly acceptable”.

With Banks promising to lend more under their “Project Merlin” agreement with the Government and coming from the man taking over the regulation of the banks, this carries some weight.

Whether or not the MPC finally elects to increase rates, (they will probably hold on for another month or so), lenders have already priced in an expected change. In fact maybe they have overpriced slightly, as a few lenders have actually reduced their rates again, albeit by a much smaller margin than they initially increased.

The good news is that lending criteria has started to ease slightly, as lenders become more comfortable to take slightly more risk. Whilst this will not change overnight, the consequence of this should be that mortgage finance starts to become slightly easier again in the coming months.

On a completely separate note, Coreco are delighted to have been given the task by BBC News Online in answering viewers’ questions as the resident “mortgage expert”. So if you or any of your applicants have any specific questions please feel free to follow the link below and ask away.

http://www.bbc.co.uk/news/uk-12644862

A selection of responses will be published on the BBC News website on Monday 14 March.

So we have had to endure accusations and calls for various measures to be introduced ranging from the sensible, which should have been in place prior to the event, to the simply absurd and damaging.

One recent voice to enter the fray is Charlie Bean, a member of the Bank of England’s Monetary Policy Committee, (MPC).

Although suggesting that there are a raft of ways to ensure that we are protected in the future from “a portfolio of instruments”, he did point out that “introducing direct constraints on the terms or availability of credit, for instance imposing maximum LTV ratios in the mortgage market” is an option to consider.

It is this direct interference into the workings of the mortgage market that many see as cause for concern, especially as, let’s face it, lenders have done a pretty good job of naturally restricting maximum LTV’s themselves via limited products, higher pricing and tougher credit controls.

In any case, for me, loan-to-values are not, and were not, the real issue. In a fully functioning, “normal” market the real issue is around affordability. If someone borrows 95% or even 100% of the value of the property as long as it is priced accordingly for risk, the applicant has the proven ability to pay and they are fully aware of the risks of a falling market then is there a real issue?

Too much has been made of the fact that property is a short-term investment to make lots of money on rather than what it is actually designed to be – a home. As long as a loan is affordable, in many cases negative equity for a few years is not a major issue as long as there is no outside pressure to move.

For me, directly controlling the market in this way is fraught with dangers. As mortgage brokers, what we actually want is nice, competitive interest rates that are affordable, priced accurately rather than over-inflated for increased risk, plus a property market that has a good supply of realistically priced properties that first-time buyers do not have to sell their souls for to get a shed in Hackney.

Many of us also want sensible underwriting practices based on the true affordability of each individual applicant, working to understand the self employed and those with variable incomes in a manner more akin to how the market was before self-cert became the rage. Whether fast-track stays or goes is of no real consequence -  that is for the lenders themselves to decide as it is a process rather than a product.

I know that by me saying that the market is capable of regulating itself will bring guffaws of laughter from many who believe that bankers are all sons of Satan and are happily feasting on the souls of us good people who have been merrily screwed. It just ain’t that simple.

In any case, and the point of all this, what Mr Bean went on to say was that “while experience of the use of these tools might be limited, it is not entirely a tabula rasa”. Now that’s a phrase you don’t hear that often!

The simple meaning for those of us who only passed their Latin exams by having the books hidden in the toilet, is Blank Slate. (According to Wikipedia it is also “the epistemological thesis that individuals are born without built-in mental content and that their knowledge comes from experience and perception”, but that’s a whole other blog!)

Suffice it to say that it seems to me that this is exactly what we need – to start again afresh with a blank slate – regulators, government and industry working together to decide the best ways forward, in consultation with the public.

A Tabula Rasa for the future, not dictatorial, but a true partnership.

The political soothsayers have been having a field day showing how we were the first into recession and the last out, and that the road ahead is going to be a frankly tortuous affair. Even Alistair Darling could not rule out the possibility of a dip back into the negative almost on the eve of the election.

The fact is that many economists have been caught a little short yet again with the apparent weakness of the recovery and there will no doubt be a lot more scratching of heads and gnashing of teeth in the days ahead.

So where does that leave us all? Well, I like to think I am a glass half full type of guy, (though my wife may disagree), and to be fair a 0.1% rise is a hell of a lot better than a 0.1% drop or a big fat 0! There is hope!

In fact, the International Monetary Fund, (IMF), has just raised its projection on how much the global economy will actually grow this year. It expects unemployment to stay roughly at the same levels, however they also stated that “a key risk is that a premature and incoherent exit from supportive policies may undermine global growth and its rebalancing”.

Meanwhile the World Economic Forum in Davos has begun which should provide an interesting boxing match between bankers and regulators, with many bankers railing against the Obama plans in the US already.

It is likely to be a heated few days, but everyone needs to understand that for the financial industry to move forward with confidence there needs to be a balance between financial institutions competitiveness and effective regulation.

Too much weight on either side could only add to the issues.

Meanwhile, the mortgage market seems to have a little spring in its step if early enquiry levels are anything to go by. More products are popping up left, right and centre and lenders are starting to get back to doing what they should be doing, lending.

I don’t expect too much to change leading up to the election, with the main issues potentially coming with a hard budget by the new Government, whatever the colour. Together with the end of support like the car scrappage scheme and Quantitative Easing, as well as measures to start cutting the deficit there are some undoubted tough times ahead.

Whilst we all want decisive action to get us out of this mess, as with any issue, there is a danger of being too decisive and over-correcting.

Whether we will indeed be limping for a generation remains to be seen, so sing us out Dr Robert, sing us out.

After two long hard years of credit crunch and recession, with another tough year approaching, who is to say that it is not a good thing for the public to let off some steam and vent their anger, whether misdirected or not, at “the machine”, or the systems that tell us what we should be doing and thinking?

Many of us may be feeling bitter about being let down by people blinded by power, money and glory who refused to accept the realities of how things were changing. The financial crisis has affected every walk of life, many losing jobs and only low interest rates keeping them in their homes. Whilst banks start to make profits again, it feels like a kick in the teeth as the everyday borrower and business still finds it hard and costly to borrow.

Before you think this is an anarchic, communist rant my comrades, it isn’t. In fact, just lashing out at bankers for example, without any thought of the effects is not the answer. Are the everyday bankers who work long hours under enormous stress and treated in a way that the average worker would not tolerate really the ones to punish? After all, MP’s literally took money out of our pockets with ridiculous expenses, whilst Governments globally and regulators failed to spot the risks.

Taxing the banker’s bonuses now will not have the desired effect. It may mean that they set up shop elsewhere, as in this technological age borders mean nothing, which could have a devastating effect on the wider economy. Businesses of all types rely on the banks making money to lend out, on those with high disposable incomes to buy their goods and services, and social services depend on the tax revenues earned out of these people. Every business in the land is in some way affected if our financial sector is not performing.

The London housing market will also be effected which will trickle through to many other areas if demand starts to wane.

I am sure there are other possibilities, rather than just simply taking an “after the horse has bolted”, vote grabbing approach. Will a simple tax stop banks taking unnecessary risk? Or will it just stop it in this country, which given globalisation means we will be affected again anyway?

It needs a sensible approach, based on communication, regulation and common ground. Make the UK the best, safest place for banks to operate in and work to benefit all of us.

Far better to take out rage at the ballot boxes, getting rid of cheating MP’s and buying a simple song that expresses our feelings this Christmas, “Killing In The Name Of” by Rage Against The Machine, the official anti X-factor song.

It is nothing against the marvellously talented Joe, but seriously, give the guy some decent music to express his talents and give us something a little different this Christmas. Something that appeals to the rebel in all of us and sends a message.

I have been paying alot of attention to the mortgage and financial press as you would expect, reading with both amusement, hearty agreement and utter despair some of the comments with regards to FSA regulation, self-certification, the behaviour of lenders and brokers, the proposed breakup up of some of our much maligned banking institutions, whilst also watching the pleasing plethora of new rates flooding the market.

There is one overwhelming thing that keeps rearing its head in almost every article I read – criticism. As one of my colleagues here said to me the other day, don’t you think everyone is now a critic? It has become too easy to judge everyone else and criticise their views, opinions and decisions, often vehemently and without thinking.

In the national press and on our TV’s criticism is everywhere, it is the new national obsession. Every weekend we each become expert singers, dancers and ice skaters, shaking our heads and muttering over every slight missed note or crooked arm, not bothering to think how difficult it may be for some kid who has never performed in public before trying to sing a legendary song that most so called “stars” would mime their way through. Oh and by the way, what the hell is she wearing?

This passes through into our industry and spills out into our articles. It almost seems that we have lost the power of empathy, or the art of civilised discussion. It seems too easy to simply comment via criticism.

I am not saying that each of us receiving “constructive” criticism is not a good thing, of course it is when it is done in the right way. Mostly, however, the easy quote is not done that way.

How about the FSA’s new proposals? Mr Boulger in his blog produced a passionate, yet reasoned argument about how the FSA had misunderstood the issues. Yes some of it was incendiary, but some of the comments it produced verged on just plain vindictive. (Before I defend the guru, let me just point out that he is guilty of some of his own unthinking criticism himself which perhaps he should take note of, but I’m an understanding chap! Is that criticism?)

One particular quote mentioned the word “dinosaur” and a few that all those who wanted a self-cert loan were “liars”. Hardly a well-reasoned response. Who else in our industry would spot some of the flaws in the FSA’s work or have the balls for that matter to publically raise it?

As an industry under threat we should be working together, not just taking any opportunity to criticise each other. Personally I believe that fast track should be banned rather than a well-documented self-certification product.

What about lenders? Do they really owe brokers a living? Many of them have supported us well for years and when they need a bit of understanding as they battle for their own survival, just blindly criticising their every move helps no one.

I see a lot of moaning, a lot of blaming instead of looking internally and changing attitudes. I saw the inspirational Paul Merrigan talk the other day, and he recited a famous JFK quote that has never been so apt.

“For time and the world do not stand still. Change is the law of life. And those who look only to the past or the present are certain to miss the future.”

So, to unashamedly quote Fleetwood Mac, (having watched a documentary about them boy they have had their ups and downs, but are still going strong), we should not stop thinking about tomorrow. We need to look to the future and start being positive with each other, remember how to empathise, to argue passionately, but constructively. And, most of all, to remember that it is a singing competition Simon !

Whilst the majority of the proposals in themselves are not unexpected, the key will be in their implementation to ensure they benefit not only the industry, but ultimately the consumer.

We all know that there has been a need for a while now to drive out the darker elements and re-professionalise the mortgage industry, especially at a time when more and more people need advice.

It is still too easy for people to walk directly into a bank branch and take out a loan without full independent advice.
The major talking point has been around Self-Certification loans where proof of income is not requested. Putting the onus back onto the lenders and making sure they check affordability seems a sensible move, though in reality the majority of lenders have already addressed this.

It is easy to get carried away with regulation after the horse has bolted, however, and whilst the buzzword is all about “responsible lending”, when used properly through approved brokers, backed up with sensible checks; there can be a place for self-certification.

We should not forget why self-certification was introduced in the first place, in order to help the many self-employed people, or freelancers, with irregular income who can clearly afford the loan but have issues ticking the traditional boxes. Arguably some self-employed customers with established businesses are a “safer” lending prospect than many who work on a pure employed basis, especially at the moment.

However, we all agree the concept was taken too far and became much too prevalent rather than being used as a well adjudicated lending tool. I would hope “fast-track” lending practices will follow suit with a return to good old-fashioned underwriting practices where applicant, broker and underwriter work together.

Ensuring Mortgage Advisors are individually regulated with the FSA, and the regulation of Buy-To-Let Mortgages are also moves that have been expected and ones that I expect most of the broker community to welcome.

There will be many who will say that such regulation will only serve to undermine any positive signs of recovery in the housing market and, in the short-term at least this could be the case.

It is essential that we look after the needs and requirements of 1st Time Buyers, the lifeblood of any full recovery, and the danger is that these changes are a prelude to more controversial policies of product regulation, for example introducing any limit on loan-to-value levels or income multiples. It is these types of changes, which will take away sensible underwriting policies, which could be really damaging.

As it stands, and the industry has until January 2010 to make their comments, sensible changes introduced now could mean that future growth is more sustainable and built on more solid ground.

 The blame game that has been going on for a while has now seen everyone from the government, the bankers, credit agencies, regulators, mortgage brokers, estate agents, the press, the general public, the Americans, the French!, or just men in general bearing the brunt for the credit crunch and ensuing recession.

All of us enjoyed the party and its how you deal with the hangover that really separates the “men from the boys” – or for Ms Harman’s’ benefit the “women from the girls”. However hard the cleanup operation is, however much we convince ourselves that “I’m never drinking again”, we all know that when the good times return, and they will return, no doubt we will all be saying, “Ok, I’ll just have a quick one” and we’ll be off again.

Which brings me on to one of the fundamental proposals over regulation going forward. There has been much debate over the future of the FSA which let’s face it, has been a far from perfect regulator. However, is scrapping it and starting again really the answer? Does the Bank of England really want the job? Is even suggesting that it may be scrapped irresponsible as we need the FSA to be fully focussed now, rather than playing politics just to secure its own future?

Scrapping one body and setting up another will no doubt be expensive, and it means that we will have another period of valuable time spent settling in and learning the ropes, although in all honesty many of those at the FSA now will probably make up the majority of the new entity. Perhaps it would be better to use the experience we have been through now we are high on the learning curve, sit the FSA down with the Bank of England, revisit their defined roles and responsibilities, and deliver a system of governance and regulation that really works.

I believe in second chances, and I do believe, perhaps naively, that no one is going to be able to read the signs of future issues better than those who went through it before and were caught short.

For us as an industry, and I read surveys that 75% of brokers want the FSA abolished, is there not more than a touch of worry that a new system, filled with a keen to impress and appear tough attitude, could actually set us back?

Perhaps we should all let the past go, accept that we all gained from each other and work together for the combined good. Maybe I underestimate the strength of feeling? Maybe I underestimate our maturity at being able to shake hands and say, “we all f***ed up, now let’s get on with rebuilding our lives”. The madhouse has been left behind, consigned to another time.

It is a small world, this crises has shown just how intrinsically linked we all are, and although we will always disagree on the past, it is now time for us to agree on the future.