Mortgage industry under fire from builders and ministers

The mortgage industry came under pressure this week from both the construction industry and the government with both claiming that lenders can do more to help the housing market.

Housing minister Grant Shapps and the house builder Persimmon have both rounded on the mortgage industry claiming that banks and building societies can do much more to help the property market in the UK.

House builder calls for more 95 per cent mortgage deals

House builder Persimmon has sold 4.7 per cent fewer homes in the first half of 2011 and have called on the mortgage industry to offer more high ‘loan to value’ mortgage deals.  With just 4,439 homes sold in the first six months of this year, Persimmon’s chief executive Mike Farley said: “People have been used to finding a 5 per cent deposit. We’re just trying to get back to the status quo situation.”

However, lenders hit back saying that 95 per cent deals were already available in the market.  Clydesdale and Yorkshire Banks already offer deals to people with a 5 per cent deposit and the bank’s retail director Steve Reid told the Independent that ‘the Australian-owned banking group could give loans to borrowers with just 5 per cent deposit because of its “prudent decision-making process”.’

Minister calls for ‘mates mortgages’

In a separate attack on the mortgage industry, Housing minister Grant Shapps has called on lenders to offer ‘mates mortgages’ to allow first time buyers to pool their incomes to buy a property.

Mr Schapps said: “If there are mates who are perfectly capable of paying monthly mortgage payments but are struggling to fund a deposit on their own, there should be straightforward options to unite with their friends.”

Lenders countered the minister’s argument by claiming that there are already such schemes available.  Britannia Building Society has offered a ‘share to buy’ scheme since 2004 which takes up to four incomes into account.

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