The dreaded comprehensive spending review has been and gone, finally laying bare the details of the cuts. The CSR will undoubtedly affect many but the question for us in the mortgage industry is, 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 facing job losses, but the reality for our industry is somewhat different.
The Government did a great PR job in allowing the rumour mill to run riot and predict the deepest cuts ever seen. In fact, it was tough but not tragically so, especially as there is a general acceptance that something drastic had to be done.
Talk of 450,000 people losing their jobs is horrendous but these are not going to go overnight. The private sector will be tested in finding these people other jobs but it is not as simple as to suggest that in January there will be another half a million people knocking on its doors.
This is a dent to consumer confidence in the short term, as has been seen by recent house price and mortgage lending figures falling back in the doldrums, but all this is really a sideshow to the real issues in our industry. Consumer confidence ebbs and flows and jobs are lost and created but it is our friends in the lending fraternity that hold the power and certain questions must be asked.
Will the fact that banks need to start repaying Government aid lead to a further mortgage shortage,dragging house prices and mortgage lending down further? Will this in turn cut off further funds for small businesses who will lead the recovery?
If lenders get further spooked by potential job losses and threatened regulatory changes that could cut out whole swathes of lending, ever tightening lending criteria could leave many with no options at all and our industry in crisis.
Alternatively, are the banks in the best condition they have been in for years, ready to lend more at profitable levels of interest no matter what they may say about capital adequacy requirements?
We must all get our own houses in order but it is the lenders who will help determine when we as businesses, as an industry or as a society even, clamber out of our shelters.
Andrew Montlake is director of Coreco