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Will CML rue the data?

Continuing controversy over the accuracy of the CML’s statistics has called into question its effectiveness as a trade body, says Guy Anker

The Council of Mortgage Lenders has come under fire from the Government over the accuracy of its statistics on first-time buyers.

The Treasury says it does not recognise any correspondence or messages from the CML about FTBs because over one-fifth of borrowers classed as FTBs by the CML are not actually FTBs.

Many are returners to the house-buying market who may have rented for a short period, been abroad or stayed with friends and family after a divorce. Many are also people buying second homes.

It is the latest setback for the trade body, which has had to endure a tough few months fending off criticism over the accuracy of its stats and even the availability of them. In August, the CML admitted that it lacks sufficient data on the sub-prime market to be taken seriously as an informed commentator on the sector.

The fallout has brought into question whether the CML is doing enough to lead and represent the mortgage market.

A Treasury spokesman says: “The CML itself explains in its latest newsletter that its research is based on a questionable definition of first-time buyer. We do not recognise the CML’s FTB data.”

The row was trailed in the CML’s News & Views newsletter last week, where it highlighted the Treasury’s concerns over its data in an article revealing huge regional differences in the payment of stamp duty by FTBs – figures which the Treasury refuses to recognise.

CML spokesman Christopher Dean says: “If the Treasury does not recognise our FTB data, what is it using? Ours is exactly the same as the FSA’s and uses exactly the same definition. The only other FTB data we are aware of is from the Department for Communities and Local Government’s Survey of English Housing, which is significantly out of date by comparison.

“We would not argue with the Treasury about the absolute numbers and proportions of buyers paying stamp duty. However, that does not change the fact that the proportions paying it are increasing, that they show massive regional variation, and that even after the doubling of the stamp duty threshold and subsequent modest uplift, it has still not kept pace with house price inflation.”

Some may suggest that the Treasury’s stance is a result of it wanting to ignore growing calls for the stamp duty threshold to be raised.

Norwest Consultants principal Harry Katz says: “There are always two sides to every story and the Treasury’s outburst is a case of the pot calling the kettle black. What is the difference in how the stats are made up? The fact is that people pay too much stamp duty, particularly in London.”

The Treasury says: “The fact is that as a result of threshold increases made by the Chancellor, less than half of first-time buyers pay stamp duty and, overall, five out of six homebuyers pay stamp duty at 1 per cent or pay none at all.”

The row between the Government and CML comes after Money Marketing reported earlier this month that the definition of a FTB used by the CML is anyone buying a property but not simultaneously selling one. The CML responded by clarifying its statistics in a press release.

The trade body is also fighting off criticism over its failure to gather data on the fast-growing sub-prime market. But it is still not in a position where it has sufficient data although it stresses that it is looking to address that shortfall.

Dean says: “We are still in a similar position with sub-prime as we were a few months ago. We are still in discussions with our members about the feasibility of collecting and publishing these figures.”

The CML’s inability to provide such stats has drawn criticism from the mortgage market and has added to concerns from a number of key industry figures over its role as the mouthpiece of the mortgage market.

One source calls it a “gentleman’s club”. Another prominent figure claims there is frustration among other trade bodies such as the Association of Mortgage Intermediaries and the Intermediary Mortgage Lenders’ Association at the lack of willingness of the CML to gather stats and lead the way in terms of innovation.

Platform head of sales and marketing Paul Hunt says he is disappointed by the CML’s lack of credible data on FTBs and the sub-prime market.

He says: “A trade body that is considered to be the Bible needs to be whiter than white. We would be prepared to help the CML gather data as we would derive immense value from better data on the sub-prime market and I would hope other lenders would also do their bit.

“If criticism is being levied at any organisation, it needs to be investigated and it needs to find ways to address them if the criticism is justified.”

Platform has its own method of defining a FTB, which is anyone who has not had a mortgage in the last 12 months.

The AMI refuses to be drawn into the debate over the effectiveness of the CML, other than to say it is imperative for any trade body to address the concerns of its members and represent them to the public and when lobbying Government.

Pink Home Loans managing director Tony Jones says: “I think the CML has genuine issues it needs to address on its stats. It has been left behind by demographic changes and the growth of the sub-prime market. It has addressed issues on buy to let and done a super job in the mainstream market but it is falling behind on sub-prime.”


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