CML news & views

Mortgage debt and housing equity are among the hottest of political topics at the moment. While the relationship between the two will vary for individual households, the reality is that in aggregate the value of unmortgaged housing wealth held by home-owners dwarfs the amount of mortgage debt. At the end of last year, unmortgaged housing assets were worth £2.4 trillion, while mortgage balances outstanding totalled £1.1 trillion. Even if house prices fall by 5% this year, 66% of housing wealth would remain free of mortgage debt, compared to 68% if prices are flat. The huge amount of wealth built up in housing will help to ensure that the vast majority of home-owners remain in a strong position.

There was considerable agreement between the five panellists in the recent ‘great housing debate’ – despite current market uncertainty. Michael Coogan forecast that a reduced appetite for risk among lenders would help sustain remortgaging. All predicted that affordability problems for first-time buyers would continue. But that will help to sustain the rental market and, in turn, the buy-to-let sector. Given current market uncertainty, the CML is not now planning to revise its forecasts until later in the year.

The government has named 15 potential sites for its planned ‘eco towns,’ and said it wants 30% of the homes in them to be affordable. A fundamental requirement will be that homes in the eco towns are attractive to buyers, in terms of design, quality and location. Meanwhile, earlier this week, the Association of British Insurers reminded the government of another environmental objective for new housing when it called for a new flood resilience kitemark for developments in floodplains.

People buying up to 80% of a property under a shared ownership scheme will be exempt from stamp duty, the Treasury has confirmed. The exemption will apply unless the value of their share is above the stamp duty threshold of £125,000. But the exemption, which was announced in the Budget, does not apply to shared equity schemes, under which the purchaser acquires a 100% interest in the property at the outset.