A return to good sense......
Monday, November 30, 2009 by Ed Mead
My last blog was reminding us how quickly things can change and here we are barely a week later and Dubai is in the poo and those very banks you and I bailed out have now decided there is going to be a double dip and have raised medium term fixed rates accordingly. There's obviously more going on than meets the eye in Dubai with Abu Dhabi perhaps witholding support until Dubai hands over State backed assets like Emirates that they've been coveting. But it's a wobble none the less with consequences that no one has yet worked out. In the last year or two many rushed to open HSBC accounts thinking they were safe and now suddenly they're talked of as taking a massive hit. Don't you just love the rumour mill.
The mortgage issue makes some sort of sense as the recovery in house prices shouldn't necessarily be viewed AS a recovery. Whilst we've seen some prices rise the market is still stalled, mainly because of difficulties in raising finance, and is in no way comparable with the market is 2007. When I say this people pointedly alludedly to the fact that some 2009 prices are way over 2007, but the vast majority are still well down and showing no signs of a quick recovery. We are a long way from a "normal" market and D&G's jump in market share from an average of c. 6-7% across all our areas to almost 12% is, sadly, less likely to be a huge increase in our levels of business but more a question of our volume holding up whilst the market volumes continue to stay suppressed.
A return to sensible lending criteria is still the way forward in the long term (and I'm old enough to remember when they WERE the norm) and we're a long way from that even if some of the mortgage brokers we're friendly with tell us that some (HMG owned) banks are still lending 5 times income. Let's not forget that some people ARE still in good jobs and ARE being paid, so you'll no doubt read of some hysterical response to this sort of lending, but it is now rare and not the norm. We are perhaps luckier than some, as a business, in that we deal with a larger proportion of these people than other agents, but with absolute numbers of transactions still not far off half what they were at the peak and mortgage advances creeping up in low single digit increases there's a long way to go yet.