HBF Weekly News Summary Friday 23 January 2009

Friday, 23 January 2008Top stories this weekCrosby recommendations included in Treasury support package.....read more Rightmove: New sellers halve as enquiries double.....read more

CML: Gross mortgage lending declines in December.....read moreQuick LinksEconomic news Housing market news Government and political news Industry news Events
Economic newsCrosby recommendations included in Treasury support package

On Monday, the Government announced a package of measures designed to reinforce the stability of the financial system, to increase confidence and capacity to lend, and in turn to support the recovery of the economy. They included the implementation of the recommendations made by Sir James Crosby in his report on mortgage finance, something the HBF has been lobbying hard for in recent months.

This week's announcements aim to address the current barriers to lending by:

Implementing the recommendations of the Crosby Report by establishing a new facility for AAA-rated asset backed securities - aimed initially at raising more capital for mortgage lending;

Extending the drawdown window for new debt under the Government's Credit Guarantee Scheme (CGS) which is designed to reduce the risks on lending between banks;

Extending the maturity date for the Bank of England's Discount Window Facility which provides liquidity to the banking sector by allowing them to swap less liquid assets;

Establishing a new Bank of England facility for purchasing high quality assets;

Offering capital and asset protection scheme for banks, with proposals for this to be coordinated internationally; and

Clarifying the regulatory approach to capital requirements, through an announcement by the Financial Services Authority (FSA).

Reducing the pace by which Northern Rock its reducing its current mortgage book

The Government intends to negotiate with the banks participating in certain facilities lending responsibility agreements that will have specific and quantified lending commitments and that will be binding and externally audited.

The Government said the likely impact of the announcements on the public finances will be mostly temporary, as investments will be held for no longer than is necessary to ensure stability and protect taxpayer interests; liabilities will be backed by assets; and fees will be charged for relevant schemes.

to topHBF welcomes Government announcement: "Banks must now restore sensible mortgage lending levels"

The HBF wholeheartedly welcomed the belated announcement by Government to implement a new guarantee for asset-backed securities, something it has been demanding for a number of months and as recommended by Sir James Crosby in his report on mortgage finance in November. However, HBF said the key to the success of the measures will be the banks' reaction and the extent to which they take up the facility.

HBF also welcomed the commitment by Government with regard to changes in Northern Rock's lending policy. It must be hoped that the influence the Government now has with the other major mortgage lenders will result in similar commitments.

John Stewart, director of economic affairs at the HBF said:

"This is a positive move by Government to address the key issue affecting the housing market, namely the lack of mortgage finance. The Government must now work with lenders to ensure banks use the facility to assist beleaguered home buyers. Restoring sensible levels of mortgage lending is absolutely critical to any recovery, and if combined with further measures to assist first-time buyers, and steps to get new home building sites started, should make a real difference to the housing market and thus the wider economy."

to topCML response to Government package of financial announcements

The Council of Mortgage Lenders welcomed the broad thrust of the package of announcements designed to support lending in the economy.
Michael Coogan, CML director general, commented:

"At long last, the Government has announced a comprehensive and coordinated package of measures sufficiently large in scale to have an impact on improving the flow of new lending.

"As always, the devil will be in the detail and there will be a great deal to work through. No doubt, there may still be disproportionate impacts on some firms or some sectors from the latest measures, but overall this is a helpful package that we think is much more likely to help lending flow more effectively again than the steps that have been taken to date.

"It is too soon to assess what impact these interventions may have on lending levels in 2009, but they should be helpful."

to topTreasury statement on restructuring its investment in RBS to deliver further bank lending to industry and homeowners

The Government also this week took action, building on the set of measures it announced on 13 October, to adjust its commercial investments in the Royal Bank of Scotland Group plc (RBS) to stabilise further its position and ensure it has the tools to enhance its contribution to the long term strength of the economy.

The Government, in consultation with UK Financial Investments (UKFI), has agreed to convert the Treasury's preference share investment in RBS to ordinary shares, with the aim of: supporting stability in the financial system; ensuring continued protection for ordinary savers, depositors, businesses and borrowers; and maintaining a safeguard of the interests of the taxpayer. In summary, this action is intended to:

Make available additional core tier 1 capital to the bank to strengthen its resources, enable it to absorb expected losses and permit it to restructure its finances; and

Give the bank the opportunity to build its capital further so that it is able to maintain and increase its support for the real economy by facilitating £6bn more lending to industry and homeowners, over and above existing commitments.

to topGross domestic product: 4th quarter 2008

The preliminary estimate released today (23 January) shows that gross domestic product (GDP) fell by 1.5% in the fourth quarter of 2008 compared with the previous quarter, the worst quarterly fall since the third quarter of 1979.

The data show that output within the construction industry decreased by 1.1% after a decrease of 0.2% in the previous quarter. Output of business services and finance showed a decrease of 0.5%, compared with a decrease of 0.6% in the previous quarter. ‘Other business services' made the largest contribution to the reduction in output.

to topBank of England publishes minutes of Monetary Policy Committee meeting

The Bank has published the minutes of the Monetary Policy Committee meeting held on 7 and 8 January 2009 at which it was decided to reduce the Bank Rate by 50 basis points to 1.5%. The minutes state that:

"...the news on the month had left the balance of risks to output and inflation, relative to the target, to the downside. And despite the impairment in the monetary transmission mechanism associated with the dysfunctional credit markets, a cut of 50 basis points could still have a significant effect on the income of many businesses and households, adding to the considerable monetary and fiscal stimulus which was already in train. The markets had priced in a cut of 50 basis points and either leaving Bank Rate unchanged this month, or implementing a larger-than-expected cut, could damage confidence further in both financial markets and the real economy. Weighing these arguments together, most members concluded that a cut in Bank Rate of 50 basis points was appropriate."

Download a copy of the MPC minutes

to top Housing market newsRightmove: New sellers halve as enquiries double

The Rightmove house price index, published this week, reported that:

Rightmove has seen a surge in potential buyer activity since the New Year, generating double the number of enquiries sent to agents in the same period last year (Total email enquiries 429,560 versus 199,762).

Average asking prices fell by 1.9%, putting prices within 8% of the bottom of the market as forecasted by Rightmove;

There was a very low level of new listings coming onto the market (43,000 this month compared to 89,000 in January last year) and there were 20% fewer resale properties advertised compared to the peak in May 2008;

Fresh data on numbers of New Year buyers and sellers showed an opportunity for a bounce-back, with the potential for higher sales volumes dependent on the actions of government and lenders.

Miles Shipside, commercial director of Rightmove commented:

"The speed at which prices have declined has been worrying, but it does mean we are potentially reaching the bottom sooner. One of the factors that will help to arrest price falls is a lack of property coming onto the market, resulting in lower inventory levels that align supply more closely with today's restricted demand. The reticence of discretionary sellers to come to market and the relatively low number of forced sellers have seen new listing numbers plummet. Add to this the collapse in the supply of new homes from developers and a massive shift of unsold stock to the lettings market, and the result is a dramatic reduction in the over-supply that has been present since early 2008."

Download a copy of the Rightmove house price index

to top CML: Gross mortgage lending declines in December

Gross mortgage lending was an estimated £12.6bn in December, down 11% from £14.2bn in November and 47% on December 2007, according to the Council of Mortgage Lenders. This is the lowest monthly figure since April 2001.

Lending totalled £256.4bn over 2008 as a whole, down 30% on £363.7bn in 2007 and the lowest annual figure since 2002. Recent mortgage approval figures from the Bank of England indicate lending will decline further in the coming months. Michael Coogan, CML director general, said:

"December is typically a quiet month in the mortgage market, on top of which the market has been constrained by a shortage of funding and reduced demand.

"This week's package of measures to support the financial system and invigorate new lending was an essential and welcome move by government. The next challenge is to settle the detailed requirements for each measure, so that they can be used by as wide a range of market participants as possible, and as soon as possible.

"A mortgage market solely funded by a few large banks and building societies would be unlikely to have the capacity to match future consumer borrowing demand, or be as competitive in the long term as the UK market has been before the credit crunch. Increasing the range of active lenders and funding capacity in the market overall is a vital next step.

"Further measures targeted at the housing market are likely to be needed to supplement the welcome intervention to address liquidity and capital concerns."

Download a copy of the CML gross lending table

to topNAEA: Comment on CML December lending figures

Following the announcement from the CML that gross mortgage lending was down by 11% in December and down by 47% on December 2008, Peter Bolton King, chief executive of the National Association of Estate Agents (NAEA), commented:

"These figures are disappointing but not unexpected. However, NAEA members reported a slight upturn in activity towards the end of December, with both buyers and sellers showing an increase in interest. Furthermore, early indications are that the market has picked up significantly in January.

"If there is any chance that these much discussed greens shoots of recovery are to take root, it is up to Mervyn King to live up to his promise to do everything possible to bring fluidity back to the market. NAEA can confirm that there are bargains to be had in the market at the moment, but if the banks won't increase lending this upturn in the market will be short-lived and consumer hope will be dashed again."

to topFSA statistics on mortgage lending

The key statistics in this week's Financial Services Authority (FSA) release are:

The total value of outstanding loans was £1,194bn, an increase of 5% compared to a year earlier. But quarterly growth continued to slow, with a Q3 increase of just 0.5%;

Regulated loans continued to make up an increasing proportion of the overall loan book;

New lending peaked in Q3 2007 at £102bn before declining to £61bn in Q3, leaving gross lending 15% lower in the quarter, and 41% lower than a year earlier;

The value of new loans for house purchase fell by 28% in Q3 to £23bn, to show a decline of 59% on a year earlier;

As a proportion of new lending, loans for house purchase made up a reduced 38% in Q3 (after 44% in Q2) while re-mortgages accounted for an increased 55% (after 49% in Q2). This was a complete reversal of a year earlier, when lending was at its peak, where house purchase accounted for 55% of new lending and re-mortgages for 38%.

to topCLG housing statistics published

The Department for Communities and Local Government has published Local authority housing statistics for 2007 to 2008. The statistics show that there were 1.77 million households on local authority waiting lists last year, compared to 1.67 million the previous year.

to top Government and political newsCouncils may soon have greater freedom to build more homes

Under proposals announced by housing minister Margaret Beckett, councils would be able to keep all the rental income from any homes they build, as well as keep the receipts from any of those homes which are later sold through Right to Buy.

The extra money could free councils to invest in the building of more council houses, helping to deliver more homes for families in need.

Councils currently only build a few hundred council homes a year, with the majority of new social homes being built by registered social landlords. The consultation proposals would seek to boost this build rate by removing some of the financial barriers stopping councils from building new properties and increasing their housing stock.

Housing minister Margaret Beckett said she wanted local authorities to play a bigger role in the delivery of council housing and invited councils interested in building more homes to discuss their ideas with the Homes and Communities Agency.

Margaret Beckett said:

"We are determined to help keep house building going in the current climate, as the long term need for more homes is not going to disappear. These new freedoms will encourage councils to play a bigger role in driving forward the delivery of new affordable homes for families in housing need."

to topConservative shadow cabinet reshuffle

Conservative party leader David Cameron reshuffled some members of his shadow cabinet this week following the return of former chancellor Ken Clarke to the front bench.

The reshuffle details are as follows.

New to the shadow cabinet:

Kenneth Clarke becomes shadow Business, Enterprise and Regulatory Reform secretary Mark Francois becomes shadow minister for Europe

New shadow cabinet responsibilities:

Alan Duncan - shadow leader of the House of Commons Chris Grayling - shadow home secretary Dominic Grieve - shadow justice secretary Nick Herbert - shadow Environment, Food and Rural Affairs secretary Theresa May - shadow Work and Pensions secretary and shadow minister for women Eric Pickles - chairman of the Conservative party Caroline Spelman - shadow Communities and Local Government secretary

Other shadow cabinet positions remain unchanged with Grant Shapps remaining shadow minister for housing.

Within the shadow CLG front bench team Bob Neil becomes shadow minister for Local Government and Justine Greening joins the team after the departure of Jacqui Lait.

to topGovernment review of regulation and redress in the UK housing market: Final report

This report was prepared for the Department for Business, Enterprise and Regulatory Reform (BERR) and Communities and Local Government by professor Colin Jones at the School of the Built Environment, Heriot-Watt University.

The research assesses the scale and scope of regulation in the housing market and the extent to which it already works effectively for consumers; the scope for simplification and strengthening the redress provisions and improving consumer awareness. Finally, the research makes recommendations for improving the effectiveness and efficiency of regulation and redress across the property sector.

The main conclusion is that there are gaps and inconsistencies in the structure and basis of regulation and redress schemes, and that there is scope for reform, extension and rationalisation. The report does not make specific recommendations on the sale of new homes.

Download a copy of the report

to topNAEA: Housing market reform needed - but it must be effective

Following the publication of the Government Review of Regulation and Redress in the UK Housing Market by the Department for Communities and Local Government (DCLG) and the Department for Business, Enterprise and Regulatory Reform (DBERR), Peter Bolton King, chief executive of the National Association of Estate Agents, said:

"For years, the National Association of Estate Agents has been calling for an appropriate level of regulation to be introduced as mandatory in the UK housing market.

"The sums of money are too large and the potential impact on families too great for the industry to remain liable to abuse by unqualified cowboys.

"Professor Jones recognises that estate agents should be better regulated to ensure that every branch has suitably qualified employees. This is a welcome step, and we look forward to the Government's response to the report's suggestions.

"I would like to reassure all of the hardworking and reputable estate agents in the industry, as well as the thousands of people considering getting onto the property ladder, that the NAEA will fight to ensure that any reform to the industry is effective.

"In the meantime, I would advise anyone entering the property market or moving up the housing ladder to ensure that their estate agent is bound by appropriate rules of conduct, as is the case with NAEA members."

to top Industry newsPlanning Policy Statement 11: Regional Planning Strategies (2004), technical amendments

CLG published the technical amendments to Planning Policy Statement 11 this week. The changes are largely minor, but members might wish to take special note of two.

Firstly, the Secretary of State is no longer required to publish a summary of representations received on the submitted RSS (paragraph 2.51 of PPS11 is thus deleted).Secondly, the RSS Implementation Plan will now form a separate document (rewording of paragraph 1.8) so this can be updated more regularly and independently of the RSS.

Click here to download

to topDefining zero carbon homes consultation events

On 17 December 2008, Communities and Local Government (CLG) launched its consultation on the definition of a zero carbon home (click here to view). This consultation is in response to uncertainties and concerns over previous definitions and their suitability within the industry.

The Zero Carbon Hub has been invited by CLG to work with the industry - house builders, planners, designers and material suppliers - to help agree a widely acceptable definition. Once established this will enable the industry to develop compliant solutions as early as possible and be better positioned to deliver mainstream zero carbon homes from 2016. The Zero Carbon Hub is therefore organising a series of events around the country to discuss the relevant issues addressed in the consultation, particularly:

Establishing a base level of CO2 reduction for all houses - a major debate is anticipated around what this base level might be. Government is proposing that three options are evaluated in the consultation - 44%, 70% and 100%;

Establishing allowable solutions that enable a house to qualify for zero carbon status - a range of ‘allowable solutions' has been proposed for taking homes beyond the base level and up to zero carbon status (which includes all energy use in the home). The scope and treatment of these allowable solutions is central to the debate.

to top EventsHBF ‘Building towards a brighter future' conference - Shapps and Kerslake to speak.

Tuesday 17 March 2009, Central London

Conservative shadow housing minister Grant Shapps heads a heavyweight list of speakers for this year's HBF Policy Conference including HCA chief executive Sir Bob Kerslake, CML director general Michael Coogan, housing expert John Callcutt, Zero Carbon Hub chief executive Neil Jefferson and, fresh from completing the Killian Pretty review David Pretty. Other speakers include Richard Donnell, Christopher Hill and industry recognised experts from HBF's own policy team.

The conference will be chaired by HBF executive chairman Stewart Baseley and will look at a range of issues and challenges currently facing the industry.

For more information and details of the full agenda please click here or contact the events team on 020 7960 1646 or events@hbmedia.co.uk

to top HBF Annual Industry Lunch 2009 - Beckett to address.

Wednesday 22 April, Hyatt Regency Hotel, central London.

Housing minister Margaret Beckett will address this year's HBF Annual Industry Lunch that will take place on Wednesday 22 April.

The event provides a unique opportunity to catch up with colleagues and other leading industry figures following what has been a difficult year. Further details and a booking form are available please click here. Alternatively contact the events team for further details on 020 7960 1646 or events@hbmedia.co.uk

to topHope Challenge: 12 - 14 June 2009, Peak District

HBF's nominated charity, Habitat for Humanity, which builds safe, decent homes for families living in poverty, is organising a fundraising event to take place next summer. Hope Challenge 2009 is a challenge event for teams of 3-6 people and will test your initiative, your teamwork and your fitness. And by sleeping in your very own shelter you will experience some of the challenges faced by those who live in poverty housing. The event involves:

2 days and 2 nights in the great outdoors Mental and physical team challenges 1 overnight shelter to build, and sleep in 1000m of hill ascent and 20 miles of trekking A balance of fitness, strategy and team work

We are looking for teams of people who want to rise to the challenge of raising funds in support of the 2 billion people living in poverty housing around the world.

Click here for more information and entry requirements

to topHousebuilder magazine

Are you a member of the Home Builders Federation? As a member you are eligible to receive a free copy of Housebuilder magazine each month. Housebuilder is a leading source of information for people working in house building, containing all the latest industry news and analysis.

Click here to claim your free copy

For other HBF events visit the website http://www.hbf.co.uk/index.php?id=eventsandmeetings

For HBM events visit http://www.hbmedia.co.uk/

to top

Rosie Hinchliffe

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