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Prime Minister says lenders are too cautious

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Prime Minister David Cameron says banks and building societies are being too cautious and are inhibiting the housing market.

Cameron says the UK’s housing market is vital to the UK economy and called on lenders to return to “respectable” lending in order to stimulate growth, according to a report in the Daily Mail.

He says: “In a way the pendulum has now swung too far the other way.

“If you are a single person, you are earning a decent salary. You go to the bank or building society, you are actually quite a good risk – they won’t give you 80 per cent of the value, they won’t give you four times your salary.”

He adds: “You need a housing market where people are able to sell and move.

“The housing market has become very stuck and we’ve got to get it moving again.”

Cameron’s comments come days after it emerged housing minister Grant Shapps is to meet FSA chief executive Hector Sants to discuss the mortgage market review.

In recent months, Shapps has repeatedly criticised the MMR for being too restrictive and suggested it would result in many people being unable to get on the property ladder.

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Comments

There are 13 comments at the moment, we would love to hear your opinion too.

  1. Let’s now see if Cameron can sway the FSA any. Doubt it somehow!

  2. Blaming the banks as usual, when you only have to look at the FSA’s position on this market to know where the blame really lies.

  3. If the Lib-Cons allowed house prices to fall from 5 times salary (80% LTV divided by 4 x salary) to something sensible like 3 times salary, I’m sure there’d be no problem with getting 80% LTV mortgages (= 2.4 x salary)

  4. Bit of a catch 22 – they want to dampen the market to stop prices rising as a home isn’t an investment but also encourage lending to get the market moving.

    The two are at odds – the more lending available; the more house moves; the more prices are likely to rise!

    Theoretically rising prices reduces the risk of lending at higher LTV’s but cannot be relied upon and lenders have to stump up more capital to cover the increased lending at the higher risk end, which costs them more and reduces their ability to lend.

    Landlords are the best placed to borrow which reduces the stock available to own which drives up prices.

    Once they crack this circle then the market might work again!

    Maybe the MMR should ban buy to let?

  5. Mark Wadsworth – that would suit you and your mates at HPC wouldn’t it? As a former BTL landlord you are presumably looking to buy back in cheaply?

  6. Hallelujah

    Its not the lenders restrictions, its the regulation and potential Ombudsman liabilities heaped upon them by a discredited regulator who is winding down into oblivion.

  7. When will the powers that be realise that high house prices must come down and that condemning successive generations to a life of servitude is no way to run an economy. Raising the level of credit to people is not the answer, “Credit is indeed vital to an economy, but it does not constitute an economy within itself. … When individuals borrow to spend, loans can only be repaid out of reduced future consumption.”-Peter Schiff

  8. Good god, and I voted for this idiot!
    When are they going to realise what got us into this mess in the first place. The banks are lending sensibly the FSA needs to regulate to stop the madness of the last decade happening again and house prices need to crash to sensible levels before the economy can even begin to move forward. Watch Ireland the will leave us behind in the coming years when it comes to economic growth.

  9. For crying out loud why don’t people get it!? WE NEED A MILLION NEW HOMES. Anything but a massive building programme will result in a) another boom and bust, b) the rich getting richer and the poor getting poorer, c) a stagnated economy (more and more money going into paying interest on loans and d) massive social fragmentation. Why? because we have ever more people chasing the same number of houses! BUILD MORE HOUSES!

  10. The answer is easy – raise interest rates…this helps keep inflation in check and also reduces house prices. This will be good for up and coming generations (low house prices) and pensioners (interest on their savings)…….oh sorry forgot they dont want to help these people – JUST THEMSELVES!

  11. @mark wadsworth,hoping to buy back back into market,good luck with that mark,you deserve that for you and your family,you are not to blame for this mess goverment,fsa,banks,fekless people to name but a few are..seems you get stick for beeen right theses days,shame poeple like you didn’t have a stronger voice,we simpley wouldn’t be in all this mess…keep up the good work.

  12. It’s pretty clear that if you spend all your cash on a house you’ll be very interested in making sure it’s value goes up. But people forget, you can’t just move job too easily. If you get fired, you’re fried. Problems become more complicated when the divorce statistic reaches you. There comes a time when people will work from home more and more. Why live in the UK when that happens? Spreading your investments is what every professional objective investor tells you – unless he’s earning from you. If you have an asset that people are “willing to lend on” then you can go out and buy stuff as long as you live to keep people in jobs. If you die, as long as you don’t cost the state money, everyone’s happy. Simples

  13. Building trade in recession and unlikely to recover for some time; shortage of housing stock; only one way for prices to go – up.

    Basic law of supply and demand and no-one can buck this rule for very long, not even the P.M.

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