So the much anticipated and dreaded Spending Review has been and gone, finally laying bare the details of the cuts that will no doubt cause some people to take up placards the length and breadth of the country.
Whilst this does have an undoubted effect on many, the question for all of us in the mortgage industry is, perhaps selfishly, does it really make any difference?
Of course it makes a difference to many of our clients, especially those who work in the public sector and are now staring down the barrel of scattergun job losses, and to some who may think twice about up-scaling their property whilst things are tight. But the reality for our industry could be seen as somewhat different.
First of all, the Government yet again seemed to do a great PR job, as they did before the last budget, allowing the rumour mill to run riot that these would be the deepest cuts ever seen. When it came down to it, though we are still to see some detail, it was tough, but not tragically so, especially as there is a general acceptance by most people who are not called Bob Crow, that something drastic had to be done.
On the face of it, talk of 450,000 people losing their jobs is an horrendous figure, but in reality these are not going to go overnight, with many to be achieved by a natural wastage. Undoubtedly, the Private sector is going to be tested in finding a lot of these people other jobs, however it is not as simple as to suggest that in January they will have another half a million people knocking on their doors.
Whilst there has undoubtedly been an element of “ideological zeal” that has gone in to some of these cuts, I am sure we can all be grateful for the presence of the Lib Dems. who, whatever you feel about them, have probably stopped an even more painful approach.
So, whilst this is of course a dent to consumer confidence in the short term, as has been seen by recent house price and mortgage lending figures back in the doldrums, things could have been worse.
In any case, all this is really a sideshow to the real issues in our industry. Whilst consumer confidence ebbs and flows, jobs are lost and created, it is really our friends in the Lending fraternity that hold the power.
I do not buy the argument that things are slow simply because of a lack of demand. As we move closer to interest rate rises, many borrowers are beginning to remortgage once more, not just because of potential increases in cost, but because they are worried a tightening of criteria and property values dipping could mean they may soon not qualify for a mortgage.
Also, though simplistically, as we move deeper into a buyers’ market, more will come out to play looking for a good deal. In any case, the nature of life in the UK, families beginning and partners splitting, an obsession with owning your own home and a lack of good quality property to buy or rent, means that demand, especially in areas like London where many will be relatively unaffected by the cuts, is likely to remain firm.
In other words, it is the lenders; together with the regulators trying to firmly weld shut the proverbial stable door, who hold the key to our immediate future, rather than the fallout from the Spending Review.
Whilst we as businesses should continue to worry about only those things we can control and get our own houses in order, it is the lenders themselves who will really help determine when we as businesses, as an industry, even as a society clamber out of our shelters.