PHILIP’S BLOG 23/10/2013

Central Square in Brindleyplace, Birmingham, England, UK


The recent announcement of the Government-backed mortgage guarantee which allows lenders to offer 95% finance to potential buyers has caused more than ripples across the chattering media .The press want to talk about bubbles but agents want to talk about affordability. Providing income multiples for mortgages remain affordable there will not be a bubble… ie 4-4.5 x income rather than 8 or more seen in times past! Those of us in the business know there have been increasing numbers of mortgage products offering up to this level. This new proposal though gives further comfort especially to the larger lenders who dominate the UK market – many of whom have significant Government shareholdings.
Our take on this proposal is that it will undoubtedly oil the wheels of the house-buying and selling process which had already started and will further build buyers’ confidence. This will undoubtedly help first timers but also those wanting to move into larger premises but are currently held back not by their income but by the size of their existing deposit. In Birmingham City Centre we are already seeing more first time buyers as well as increasing numbers of vendors now looking to seize the opportunity – some stepping up into larger city apartments and others stepping out into Birmingham’s suburbs.

On a twenty year average, the number of residential transactions since the beginning of the recession up until the beginning of this year has been running only at 60-70% . We are expecting this new assistance will bring the market over the next year back in line with the long-term trend.

Purchasers want to know they can readily sell or let.The latter is certainly almost always possible as Birmingham’s popularity has jumped forward in recent years.The new move by Deutsche Bank into Brindley Place will prompt a big wave of new tenants into the City.

The Help to Buy assistance will now bring back sales into a reasonable time frame for vendors ensuring City living forms part of their lives and not just there long-term pension portfolios.