Local councils, beginning with Warrington, are to assist first time buyers with a cash backed indemnity of 20% of a property’s value in an attempt to assist them on to the property ladder.

The scheme works in conjunction with Lloyds TSB who will provide home loans at interest rates that reflect a 25% deposit if a local first time buyer can come up with 5% themselves. The remainder is provided as a bond by the council who then earn interest in return for putting up the deposit guarantee.

Tha maximum loan value is a surprising £350,000, almost three times the typical home value purchased by first time buyers in the UK as a whole.

Blackpool, Northumberland, Newcastle under Lyme and East Lothian are set to pilot a similar offering too.

Check out our low, low selling fees at our HOME page:

I do hope that all this talk of prospective mortgage capping and potential lending restrictions is just wild speculation.

The small matter of future financial meltdown is, I grant you, an inconvenience worth avoiding.

But to tell lenders the maximum that they are permitted to lend the British home buying public? That’s something akin to lending controls of the 1960’s and 1970’s. A hint of communism in fact.

Markets need to be controlled. But by themselves. Not by Government intervention or that of its unelected cohorts like a central bank, the FSA or anyone else for that matter.

I thought that, with what should be a politically ’right ish’ administration now in place, the result would be a drift away from central control, diktat and over regulation, Brown style?   

If a so called regulator decides to limit home loans to say, 75% of property value, demand will plummet, sales will dwindle further, values will drop, consumer spending will dry up and recession beckon once again. Genius.

By all means look at natural alternatives to mitigate economic overheating. Using interest rates properly was supposed to do that but the B of E messed that up. Get back to building society type lending where loans are linked to deposits. Encourage lenders not to go back to the days of 100% + mortgages. Fine.

But to tell a first time buyer by way of legislation how much deposit he or she must find? What next, cake rationing because we are all getting fat?

The problem overlooked in the sub prime crisis that led to impending financial doom for us all, was culpability. If banks think they will be bailed out no matter how irresponsible they are then the safety net implied will always encourage such irresponsibility.

Let a bank or two fail of its own doing and make directors and the creators and traders of complicated debt products criminally liable for the consequences of their unfettered actions. They are the ones to keep in check. NOT the innocent, aspirational first time buyer.

And there’s a political contradiction here. Since the coalition Government was formed a month or so ago we have heard Grant Shapps MP, the Housing Minister, talk of encouraging home ownership. But then not a week later we hear that at George Osborne’s behest, the very buyers that underpin such a philosophy are to be ‘restricted’ in their ability to buy under the oversight of a newly beefed up Bank of England.

Make your minds up comrades but, above all, leave the property market alone.

Two separate property reports came out today. The first, from Rightmove, states that asking prices on their website have edged up but by less in May than expected (0.7%) and that unsold stock levels are at an all time high amongst subscribing agents, at 71 properties per branch up from 68. This is the third monthly increase in a row of properties languishing.

The second report hails from the Council of Mortgage Lenders. It says that mortgage lending was UP 25% in March compared to February. 45,000 loans instead of 36,000. Moreover, borrowing by first time buyers has recovered faster than amongst other homebuyers.

There seems to be somewhat of a contradiction here, notwithstanding the slight lag in the time periods covered.

Properties certainly do seem to be selling in better number and the CML numbers support that. But the Rightmove stats point to a still over optimistic pricing culture amongst sellers and their estate agents, the latter being largely to blame for their own demise in this respect now. Regardless of funding issues, demand will only be supported by justifiable prices. Those homes that are out of sync will just sit there unsold as indeed is clearly the case so predominantly currently as shown by Rightmove’s figures.

No amount of freeing up of mortgage monies will buck the reality of market value in the wake of the past two years of propery hurt and nor should it (again) or else we will be back to sub prime and Northern Rock type turbo lending doing their bit to prematurely destroy the planet. A sort of ‘global lending overheating’ rather than mere gobal warming.

So, price your home right or you just won’t sell. If it is accurately costed, you will sell. Home owners and, importantly, estate agents must wake up to that simple but pertinent philosophy or else transactional volumes will not recover from their stall and no amount of blaming HIPs or mortgage lenders as the reason for a naff market will significantly change that, although they do both have a part to play.

It’s therefore surprising that agents’ have increased the value of their new instructions at all in May, when faced with record levels of unsold homes as they are. Stupid more than surprising in fact.

To get the market moving its not just about mortgage liquidity. The CML numbers show that too. There are plenty of home loans around and at better LTVs and rates than for some time. Arrangement fees are lower too and are much less a bar to entry.

But agents must start being honest and bravely realistic with their values and sellers should be less greedy and not taken in by the initial flattery of a nice price. Because buyers aren’t, well… buying it really.

Long will volumes stagnate until a much needed realism kicks in.

Mortgage repossession orders in Essex were 46% down in the last quarter of 2009 compared to the same period in 2008. (Source: Ministry of Justice, February 2010)

Brentwood had the largest decrease in possession orders of any local authority area in the UK with 10 cases from 1st October to 31st December, down 73% on the year before. There were a total of 40 orders in Brentwood Borough for the year. 

For the whole of 2009, there were 1685 repossession claims leading to orders throughout the county, with Castle Point noticing the highest average at 4 per 1000 properties of anywhere else in Essex.

Camden had the lowest repossession rate of anywhere in the country at less than 1 per 1000 in the twelve months. However these numbers, as with Castle Point, are somewhat blurred by differences in home owner occupation rates.

Bradford and Leeds are by far the worst local authority areas hit by lenders’ moves to reclaim their collateral. In sheer volume terms they saw 1050 and 1035 orders made respectively during 2009, albeit down 30% or so on 2008.

Ironically (although perhaps indirectly linked) Zoopla have unveiled research today that shows Bradford as the most affordable place to buy a home currently, based on the percentage of earnings needed to service a mortgage relative to the local property price. http://blog.zoopla.co.uk/

Will the Spring deliver its traditional burst of activity to the Essex housing market? In particular, will the daffodils be accompanied by a blooming of new property instructions too?

Time will soon tell, however the Nationwide Building Society figures from last week show the first drop in house prices (1%) for nearly a year, and this may well focus the seller’s mind too.

Many would be sellers have been waiting to see what the market does. As ever waiting for prices to top out before jumping in with both feet. I don’t think that we are seeing anything other than a blip from just one indices in a snap period warped by weather and stamp duty anomolies. But others will believe, if the latest short ride up the property escalator seems to have halted, that now is the time to get off, particularly the thousands of ‘accidental landlords’ that couldn’t sell in 2008 and 2009.

Accurately predicting the property market has long since eluded the cleverest people and so I shan’t even try to call what might happen for the remainder of 2010. But one thing is hoped and that is for a fairer year than the last two have been. 

Prices are one thing but what is really needed to ensure a decent market is a return to decent volumes and that won’t happen until mortgage lenders loosen their grip on the funding tap somewhat. That does seem to be happening though now. So here’s hoping for a decent spring in more ways than one…