There was some ‘startling’ news around yesterday on the mortgage front.
Sky, the BBC, newspapers and all were lyrical as to how the Government is introducing guidelines to prevent a re-occurrence of the 2008 financial meltdown by ensuring that people can actually afford their mortgages.
It’s widely acknowledged that the recent economic bust was in the main due to over zealous lending which caused demand to outstrip housing supply but without the safety net of property owners being able to actually afford their loans. Once the dominoes start toppling….
The measures announced yesterday include asking home buyers to prove their income, not to allow borrowers to ‘self certify’ that they can afford a loan of any size they choose and ensuring that if a borrower takes on an interest only home loan, they demonstrate the means with which they intend to pay off the capital at the end.
The media were apoplectic about this, rousing that this would cost the property market thousands of ‘lost transactions’ each year. A real boot in the gob of a faltering property industry and so on.
This, the same media that have bashed the banks for encouraging the financial crisis. The very same media that has assaulted Governments on their lack of scrutiny and regulation in the lead up to Lehman etc. And indeed the same bunch that fuelled the housing boom with sensationalist headlines of ‘House Prices Rocket’ and ‘Property Boom’ etc etc.
And do you know something? For buyers to have to find a deposit to buy their home, prove that they can afford it and indeed show that they can pay back the borrowings at the end of the term is hardly the stuff of uber ground breaking financial diligence, is it?
But it does of course make for a few segments of over hyped reporting in an otherwise quiet news cycle.