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Positive moves

It is a cause of some delight when there is some light in all the doom and gloom. In Scotland, they are forecasting a 14 per cent rise in house prices so the crisis is not being felt so acutely as in other parts of the UK.

Shareholder reports from national firms of housebuilders tell us they are moving stock even though the sale process is taking a little longer than previously.

It is my view that the laws of supply and demand will prevent the UK experiencing the worst aspects that are afflicting the US market and that within the coming year we will see the emergence of a much better environment, with lenders more confident in their ability to lend and consumers more ready to take on the responsibility of home-ownership.

In taking this view, there is an acceptance that there will be no significant down-grading of prices, which means that first-time buyers will continue to find it difficult to get on the housing ladder. Government initiatives will try to encourage shared ownership but these seem fraught with difficulty if their availability is limited to individuals in chosen occupations.

This is just one way in which Government is beginning to take a more proactive role in the market. Planning consents have always influenced developments and have driven prices higher in some areas by restricting supply, Bank base rate has affected levels of cost.

The appetite for interference seems to be greater, with ministers trying to influence the design of products and liquidity through central bank support.

Advisers need to watch developments closely. There have already been significant changes in the structure of the market, with one of the major lenders underwritten by the Government. Is it possible to compare its products with those of lenders that are still subject to the normal risks of the market? Should advisers take into account the way in which firms are capitalised and are they able to make these comparisons?

One of the features of the recent market has been the way in which debt has been traded. The credit crisis has been caused largely because mortgage debt has been taken on by firms which had little involvement in the original arrangement and many borrowers have found their debt has been assumed by a party not known to them. This is particularly difficult if the borrower falls into arrears.

It is important that advisers adopt the highest standards and maintain the confidence of clients. Tell clients in plenty of time of any unavoidable rate shocks and be proactive in contacting clients as they approach the renegotiation of their deal. Drive these processes through and volumes will be maximised, profitability sustained and job opportunities maximised.

Richard Fox is chief executive of the Society of Mortgage Professionals


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