Shortly the government will announce plans for the Bank of England to take on powers to be in command of banks and building societies mortgage lending actions. The committee is proposed to be compiled of members of The Bank of England staff and the Financial Services Agency.
The idea is to act as a controlling device on banks and building societies so that when credit is showing signs of becoming too freely available they will be able to stifle the lenders capacity to lend. On the other hand when lending is limited they can take measures to open up credit more freely. This will furnish the Bank of England better control over money supply (which is dictated by bank lending) and so more ability to manipulate economic action.
Had these controls been in place over the last few years then it is thought that the property market overheating, which reached it’s peak in 2007, could have been avoided. Property prices were pushed to untenable levels by the very free availability of mortgage finance, including extensive sub-prime lending. Buyers could borrow at levels which escalated prices too high.
Likewise, through the present lending shortage the Bank of England will be able to promote lending in order to support the economy.
Such aid will be principally important for the mortgage market. Although property prices appear to have steadied there are nonetheless far fewer property sale transactions going through. The present figures, at around 45,000 per month, is about half of the long term standard and much of the problem appears to lie with lower mortgage availability. Anyone seeking to Sell Home Fast is presently facing a demand for property at about half earlier levels. So the only way to speed up that Quick House Sale has been to significantly reduce asking prices and this is the reason for the collapse in property values.
This announcement therefore should be great news for the housing market. Much detail of the new powers remains to be revealed but it is to be hoped that there is substantial focus on the mortgage market. This seems expected as an increase in the availability of mortgages is not just good news for those demanding their estate agents to “Sell my Property fast”, it is also very good news for the construction trade. With unemployment likely to continue to increase for another year or so a stimulation in housing construction would be of benefit to the wider economy as well.
Finally, it is hoped that any mortgage lending increase gives due attention to the first time buyer. Those looking for their first home have been particularly affected by the mortgage dearth, but they remain vital to the housing market upturn. It is hoped that the coming weeks see the expansion of new first time buyer packages which will galvanize the property market recovery.
