COUNCIL of MORTGAGE LENDERS

1
Housing Studies Association Conference, April 2005

• Whither Home Ownership in the UK?
• Peter Williams, Council of Mortgage Lenders,
  London,UK

2
The Presentation

• Whither Home Ownership?
• Source of debate with very polarised views
• Concerns re role/impact/choice/subsidy
• Presentation seeks to overview development of
  this tenure and its future prospects
• Situated in current context of UK govt seeking to
  grow all tenures? !
• CML role, all tenures but .

3
Looking back

• Rise of home-ownership (and social housing), fall
  of PRS Why?
• Role of government relative costs/consequences
  some ambivalence
• Role of subsidy MITR, CGT, Schedule A,
  Improvement Grants, Sheltered Circuit
• Role of affluence/stability/rising prices
• Role of choice consumer preference but ?

4
Where people would like to live in ten years'
time, 1975-2004

• Source MORI 1992/1996-2003 all other years BMRB
• Notes includes housing associations from 1989.
  The apparent dip in popularity of home-ownership
  1997 and 2002 is likely to be due to varying
  methodologies and sampling errors.

5
Looking back

• All these factors had a role but primacy?
• Consequences of the rise of home ownership v
  mixed, half the poor
• ODPM report mixed blessing
• Risks to individuals and the system 1990s
  recession homes lost and impact on length/depth
  of recession
• Safer with renting? Other costs

6
House price growth vs. mortgage possessions
Source Survey of Mortgage Lenders, Office of the
Deputy Prime Minister
7
Where we are now?

• 71 but with significant national and regional
  variations
• Growth in secured debt/indebtedness/assets
• Decline in numbers/ of FTBs
• Affordability pressures but .
• Historically low possessions/arrears
• Price bubble slowly deflating ?

8
First-time buyers, number and value of loans
Source Survey of Mortgage Lenders
9
Total property assets/mortgage debt
10
Where are we now?

• But UK 13th in EU HO league (and 5th in Social
  Housing) part historical legacy.
• With low interest rates, stable/rising
  employment/wages should this go higher?
• Arguments about balance? At what level?
• Governments uncertainty re HO but 75?
• Trapped by its past?
• LCHO programme modest in all respects

11
Looking forwards?

• Toynbee/Walker Labour stopped short of the logic
  of its own policy which surely ought to have been
  universal owner occupation
• Recent announcements moved this agenda on -
  assets opportunity, haves/nots, short/long
  term, battle over?
• LCHO Review - Homebuy variants, building on
  report of HOTF, lender input

12
Looking forwards?

• More obviously pro - Stamp Duty change but
• Reform of Stamp Duty, Council Tax, ISMI/MID,
  Bankruptcy, IHT, Equity Release even CGT?
• Balance of subsidy - Wilcox
• Value for money?

13
Looking forwards?

• Returning to market context
• CML Forecasts roughly central but Capital
  Economics 20 adjustment
• Some considerable risks but BtL no.
• Blurring the boundaries flexible tenure?
• Shelter/CML stance but in reality?
• Risk based pricing flowing out of Basel 2
• Financial capability - FSA

14
CML Forecast
15
Looking forwards?

• Sustainable home-ownership - on agenda
• Self protection up and better but
• JRF programme looking to future options/issues
• Buyer beware - ultimately a market
• Govt blurring the boundary via Barker
• Flattening price trends/supply/demand balance
  posing new challenges
• Cannot micro manage the market

16
Payment protection insurance, policies in force
17
Arrears forecast
18
Possessions forecast
19
Conclusions

• Long period of growth
• Slowing but potential - some locked in
• Better equipped for a bigger sector
• Better able to exploit what it offers
• Question as to balance of tenures/edges between
  tenures
• Do we still need polarised debate or something
  else?