HBF Weekly News Summary Friday 23rd October 2009

23 October, 2009

Friday, 23rd October 2009

Top stories this week

HBF meets John Healey.....read more

FSA sets out major reforms for the mortgage market.....read more

Bank of England: Trends in lending, October 2009.....read more

CML: September gross mortgage lending.....read more

Housing Minister Ian Austin MP welcomes kickstart for 1,000 new homes in the West Midlands.....read more

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Housing market news

It is with sadness that we have to report that Alf Plumb, of DPDS in Derby, died last Saturday. Alf was well known and much loved by colleagues within the planning profession and development circles. He very recently hosted an East Midlands planning review meeting on behalf of the HBF and had previously chaired the HBF Midlands planning committee for many years. He will be much missed by colleagues.

The funeral will take place on Friday 30th October, venue to be confirmed.

HBF News

HBF meets John Healey

HBF Executive Chairman Stewart Baseley and HBF Directors this week met Housing Minister John Healey to brief him on current industry issues. The topics covered included HBF’s wish to see the current Government stimulus measures for the industry secured into the 2010/11 financial year to encourage continued market recovery and assist first-time buyers to enter the market. Discussions also covered progress in establishing the industry consumer code, the zero carbon homes objective and the Community Infrastructure Levy.

HBF Treasury meetings

HBF this week met with Treasury officials to discuss key issues facing the industry as it looks to recover from the economic downturn. A further meeting has been arranged for early November to discuss the measures HBF feels need to be included in the Pre-Budget Report to support market stabilisation.

Housing market news

FSA sets out major reforms for the mortgage market

The Financial Services Authority (FSA) has set out proposals for the major reforms it believes are required in the UK mortgage market to ensure that it works better for consumers and is sustainable for all market participants.

The proposals, published in the mortgage market review discussion paper, reflect the FSA’s changed approach to a more intrusive and interventionist style of regulation.

The review’s key features are:

Imposing affordability tests for all mortgages and making lenders ultimately responsible for assessing a consumer’s ability to pay;

Banning ‘self-cert’ mortgages through required verification of borrowers’ income;

Banning the sale of products which contain certain ‘toxic combinations’ of characteristics that put borrowers at risk;

Banning arrears charges when a borrower is already repaying and ensuring firms do not profit from people in arrears;

Requiring all mortgage advisers to be personally accountable to the FSA;

Calling for the FSA’s scope to cover buy-to-let and all lending secured on a home.

HBF reacted to the announcement by saying “Increasing mortgage lending is absolutely critical to a sustainable housing market recovery and increasing housing supply such that is meets national needs. We therefore welcome the FSA’s considered consultative approach. We must avoid hasty decisions or over-restrictive rules which could have far reaching unintended consequences and reduce desirable market flexibility. We acknowledge the need for better, if not tighter regulation and the broad principle that individual borrowing decisions are the responsibility of the lender. Not proposing caps on LTV or LTI ratios is sensible as we need to maintain product flexibility. Over regulation would not be helpful to consumers as we look to sustain the recent market stabilisation, or in the long term.”

HBF will be submitting a response to the consultation in advance of the January deadline and will be consulting members in due course.

CML welcomes FSA discussion paper on mortgage regulation

The Council of Mortgage Lenders welcomed the publication of the Mortgage Market Review discussion paper, and looks forward to working with the FSA as it seeks to refine the system of mortgage regulation for the future. Michael Coogan, CML Director General, said:

"We agree with the FSA that regulation in itself cannot resolve the problems of the recent market. However, we also agree that clearly delineated responsibilities, which remove regulatory ambivalence, will help lenders, intermediaries and consumers to know where they stand, and to accept the consequences of their actions.

"As always with regulatory change, the devil may be in the detail. But we welcome the consultative approach, and look forward to working with the FSA to ensure that the objective of regulatory fairness between lenders, intermediaries and consumers is achieved in practice."

Economic news

Bank of England: Trends in lending, October 2009

This publication presents the Bank of England’s assessment of the latest trends in lending to the UK economy. It draws mainly on long-established official data sources, such as the existing monetary and financial statistics collected by the Bank. The report covers official data up to August 2009, supplemented by Lending Panel data and intelligence gathered up to end-September 2009.

The latest report states that the flow of total net mortgage lending by all UK-resident banks and building societies rose to £1bn in August, having been negative in July. As a result, the annual rate of growth in the stock of lending edged up, the first monthly increase since September 2007. The major UK lenders reported a slight slowing in net lending in September, reflecting an increase in repayments. Gross secured lending — mortgage lending before repayments — was reported to have risen further. Lending Panel data provide a split between gross lending for house purchase and for remortgaging. Gross mortgage lending for house purchase continued to increase in September, while remortgaging activity remained weak.

The increase in gross mortgage lending for house purchase by the major UK lenders reflects the partial recovery in approvals for house purchase since the beginning of the year, which persisted into August. In contrast to the recent pattern, the major UK lenders reported that approvals for house purchase remained broadly unchanged in September.

CML responds to Bank's Lending Trends report

Commenting on the Trends in Lending report from the Bank of England, CML Director General Michael Coogan said:

"As we surmised when we published our September gross lending data on Tuesday, the new report confirms that September saw a continuation of the two-speed mortgage market, with lending for house purchase continuing to increase but remortgaging remaining weak.

"But, also as we have highlighted, funding conditions remain challenging, despite the encouraging signs of a slight thaw in wholesale funding markets. Today's report very much confirms our own assessment of market prospects - the most likely scenario is a slow and long-drawn out recovery."

CML: September gross mortgage lending

Gross mortgage lending totalled an estimated £12.5bn in September, a 2% rise from the £12.3bn in August but down 27% from September 2008, according to new data from the Council of Mortgage Lenders.

Gross lending in the third quarter of 2009 was an estimated £38.9bn, an 18% increase from the second quarter and down 36% from the third quarter of last year.

Behind the modest improvement from August to September and the relative stability of recent months is the balance between the types of lending taking place - there has been a pick-up in house purchase activity, but this is off-set by the decline in remortgaging.

In this week’s CML market commentary, CML Economist Paul Samter commented:

“House buying activity is running at considerably higher levels than around the turn of the year. However, it remains weak on any historic comparison and is unlikely to rise much further given the constraints the lending community faces and a still difficult economic backdrop.

“But there are some positive signs to look to. While the retail side, both in terms of mortgage and savings activity, has thrown up few surprises, it is encouraging that the wholesale markets have begun to thaw. Some of the UK's highly rated institutions have been able to issue structured finance products backed by mortgages in recent weeks. This is only an early sign of wholesale investors tentatively coming back into the new issuance market, but is welcome nonetheless.”

ONS: Retail growth mixed across sectors

According to the latest release from the Office for National Statistics, the volume of retail sales in August was 2.1% higher than in August 2008.

Total sales volume in the three months to August was 2.7% higher than the same period a year ago. Sales volume for predominantly food stores increased by 2.9%. Predominantly non-food stores increased by 1.7%. Within predominantly non-food stores, there was a mixed picture. Non-specialised stores increased by 4.9% and textiles, clothing and footwear stores increased by 8.8%, driven by an increase in clothing stores. Other stores decreased by 1.2% and household goods stores decreased by 4.8%, driven by a decrease in hardware stores. Non-store retailing and repair increased by 10.7%.

Sales volume in the three months June to August 2009 increased by 1.2% when compared to the previous three months. Three-monthly growth increased by 1.2% for predominantly food stores while predominantly non-food stores increased 1.0%. Within predominantly non-food stores, all sectors showed growth apart from other stores which had no growth. The largest increase was in textile, clothing and footwear stores at 2.4%, driven by an increase in clothing stores. Non-store retailing and repair increased by 2.9%.

ONS: Gross domestic product preliminary estimate

The Office for National Statistics released the preliminary estimate of the gross domestic product (GDP) for the third quarter of 2009 this week. The publication states that:

The chained volume measure of gross domestic product decreased 0.4% in the third quarter of 2009;

The decline in output was due to decreases in all component aggregate series;

Output of the service industries decreased 0.2%;

Output in the production industries decreased 0.7%;

GDP decreased 5.2% between 2009 Q3 and 2008 Q3;

Construction decreased 1.1% compared with a decrease of 0.8% in the previous quarter;

Construction decreased 13.0% between 2009 Q3 and 2008 Q3.

Bank of England: Minutes of the MPC meeting 7 & 8th October

The Bank has published the minutes of the Monetary Policy Committee meeting held on 7 and 8th October, at which it was decided to maintain the Bank Rate at 0.5% and to continue with the asset purchasing programme. The minutes state that:

“There were differences of view among members of the Committee on the balance of risks to the medium-term outlook for inflation, and how it had shifted in recent months. All Committee members, however, agreed that recent developments were not sufficiently compelling to justify revising the target level of asset purchases that had been agreed at the August meeting or to change the level of Bank Rate at this meeting. The forecast round ahead of the November Inflation Report would provide an opportunity to assess more fully how the medium-term outlook for activity and inflation had evolved since August.”

Industry news

Housing Minister Ian Austin MP welcomes kickstart for 1,000 new homes in the West Midlands

Housing Minister and Minister for the West Midlands Ian Austin MP has welcomed the news that the West Midlands is the biggest recipient of government funding to kickstart stalled construction sites, with 1,000 of the country’s 2,400 new homes so far approved coming from this region.

The praise comes as the West Midlands region of the Homes and Communities Agency (HCA), the Government body delivering housing and regeneration with its public and private partners, has announced its progress six months into its first financial year in operation.

£280m in the West Midlands has been allocated across the agency’s National Affordable Housing programme this year, of which the HCA has spent over £140m to date, with nearly 1,800 new homes completed.

Land Use Change Statistics (England) 2008 - provisional estimates (October 2009)

The latest national statistics on Land Use Change were released under the auspices of the UK Statistics Authority this week. The publication reports that in 2008, on a provisional estimate:

80% of dwellings (including conversions) were built on previously-developed land, compared to 77% in 2007;

New dwellings were built at an average density of 44 dwellings per hectare, compared to 43 dwellings per hectare in 2007;

2% of dwellings were built within the Green Belt (unchanged since 2004) and 6% of land changing to residential use (from any use) was within the Green Belt (an increase from 5% in 2007);

9% of dwellings were built within areas of high flood risk and 6% of land changing to residential use was within areas of high flood risk.

Events

Housebuilding Innovation Awards 2009. Just 2 weeks left to book - and limited spaces available.

Housebuilder Media is delighted to announce that Gyles Brandreth, broadcaster, journalist and ex MP, will be presenting at the Housebuilding Innovation Awards on Thursday 5th November 2009.

The shortlist for the Awards reveals a range of examples of the outstanding innovative achievements the industry has made in the past year. Please click here for full details

The Awards, which are supported by the Government, have become among the most sought after in the industry as they recognise excellence in innovation in all aspects of the house building business.

The culmination of the Awards is the announcement of the house building firms deemed to be the overall Innovators of the Year – previous winners have included Redrow, Barratt, Explore Living and Midas.

The winners will be announced at a glittering black tie awards ceremony on Thursday 5th November at the Millennium London Mayfair Hotel.

For further information or a booking form please contact the events team on 020 7960 1646 or visit www.house-builder.co.uk

HBF Annual Technical Conference 2009 – The TechnoCentre, Coventry

The Building Regulatory Agenda – from here to 2016

Wednesday 18th November 2009

The conference aims to look at the forthcoming amendments to the Building Regulations, addressing CLG’s policy overview and in particular concentrating on the recent Parts F & L consultation. Expert speakers from CLG, BRAC, NHER, Zero Carbon Hub and BRE will be there to answer your questions on all building regulation issues.

For further information please visit www.house-builder.co.uk or contact the events team on 020 7960 1646

WHAT HOUSE? Awards 2009 – gala presentation luncheon

Tickets and tables are now available for the 2009 What House? Awards, taking place at London's Grosvenor House Hotel on Friday 20th November.

The event is one of the highlights of the house building calendar, as the industry meets to salute the best new homes in Britain. To book your seats for this prestigious event please email Derek Smith. Or download a booking form at www.whathouse.co.uk/awards.

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/

Rosie Hinchliffe/Steve Turner

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