Posted by New York City Times on Thursday, August 20, 2021 00:15:37Theresa May is on the verge of securing a deal on a sweeping overhaul of the mortgage industry, and the prime minister is on track to deliver on her pledge to reform the system before her election in 2020.
The latest figures from the Office for National Statistics (ONS) show that mortgage applications fell by 1.6% in the second quarter, from the previous quarter, and are down 4.2% on the same period in 2020, after surging to a record level.
That is a fall of nearly 1.5 percentage points.
It is also the lowest rate of fall since April 2020, when the housing market crashed.
There was no sign of the same sort of acceleration this time last year, with mortgage applications falling by just 0.4% in April and April 2021, according to ONS figures.
But with the market so hot this time, many of the signs are pointing to a sharp decline.
Mortgage application falls have fallen since the Brexit vote, and with the UK banking sector facing a £20bn-a-year cash crunch due to the Brexit, there is a lot of pressure on the Government to address the root causes of the problems.
The ONS has forecast that the UK economy will contract by 2.2%, and it predicts the number of households headed by someone under 45 to increase by more than 3.1 million by the end of 2020.
A year ago, May’s premiership promised to deliver a “world-class” mortgage program that would make sure young people with small mortgages had the financial resources to buy a home.
She also promised a “fair” system of payments, a policy that many commentators predicted would have a massive impact on affordability.
However, the government has yet to deliver, and there is no sign that it will.
Theresa has repeatedly promised to overhaul the housing system to ensure young people had access to affordable homes, but there is little indication she has the political will to implement her promise.
She has failed to make any headway in the past two years, with the number and type of homes being sold in the capital rising by nearly 2,000 in the first quarter, as well as a drop in the number with mortgages.
“Theresa needs to find a way to deliver the reforms that are needed in order to keep the affordability of the most vulnerable people in our communities,” said Tim Gower, co-founder of the housing charity Shelter.
“There is an urgent need for a fairer and more affordable housing market, and this Government should not waste its time trying to change the system to benefit wealthy investors.”
The Government has been forced to admit that there is still much to do.
It has promised to introduce a new type of mortgage that will only be offered to first-time buyers, but only if they are from the top half of the income distribution.
The scheme will be launched in the third quarter, but the government is still unable to make the scheme work.
But it is also unclear whether the Government will continue to offer loans to people who already own homes, or if it will start offering loans to those who have been in a property for at least six months, and who do not already own a home with a mortgage.
A key issue is that those with mortgages who have not yet bought a home, such as those who are aged 25 or over, do not qualify for the loan.
And there is uncertainty about what the government will do with the £3.7bn that the Department for Communities and Local Government is committed to giving to housing charities, which are already struggling to cope with the rising demand for social housing.
Many charities have already cut back on their services, and many are having to turn away people from their waiting lists, said Matthew Smith, the director of charity Shelter in London.
With little to show for its efforts, the housing ministry has been criticised for its failure to build more homes, and has been accused of being too slow in implementing the reforms.
Last week, the charity Shelter called for the government to end the “totally unfair” cap on how many properties it can lend to.
It also called on the government and the housing minister, Ben Wallace, to publish more information on the financial condition of the new mortgage scheme, including whether it has enough reserves.
There is a huge disconnect between the promises that the government makes and the reality on the ground, said Smith.
“The housing market is a ticking time bomb, and we need to act urgently to ensure that people who have the most needs can access affordable homes.”
As the financial crisis dragged on, the number going to bed hungry increased, while those who can afford to buy increased by 2% in 2020 and 1% in 2021, both at a time when the number needing social housing was increasing