COUNCIL of MORTGAGE LENDERS 1 Introduction Dan Corr Chair, CML Northern Ireland Regional Director, Nationwide Building Society Audit Chair, Co-Ownership Co-Ownership annual report and strategic review 2005

COUNCIL of MORTGAGE LENDERS 2 Never a borrower or a lender be … An old adage, has it stood the test of time? £351 millions from lenders cumulatively for Co-Ownership mortgages No single lender with more than 20% Local scheme, supported by multiple local and national lenders Lenders always represented on the Board

COUNCIL of MORTGAGE LENDERS 3 Impact for NI housing market Additional FTBs Mainstreaming of Co-Ownership model In NI In UK

COUNCIL of MORTGAGE LENDERS 4 Perspectives on the NI market & affordability A mortgage lender’s Alex Solomon, CML A shared ownership specialist’s Alan Crowe, Co-Ownership

COUNCIL of MORTGAGE LENDERS 5 A Mortgage Lender’s Perspective on the Market and Affordability Alex Solomon Senior Policy Adviser, CML and Secretary, CML Northern Ireland Co-Ownership annual report and strategic review 2005

COUNCIL of MORTGAGE LENDERS 6 What does affordability mean? There are two aspects to affordability: First, the ability to service mortgage debt once you have bought a home. Second, the ability to finance entry to home ownership – e.g. deposit, stamp duty, EA fees, mortgage application fee, legal fees and simple things like buying a bed! Will consider each aspect of affordability for first time buyers.

COUNCIL of MORTGAGE LENDERS 7 Outline What does affordability mean? What does the data tell us about relative affordability in Northern Ireland? Is an affordability problem there, building or non-existent? Some thoughts on how policy can address affordability constraints.

COUNCIL of MORTGAGE LENDERS 8 House price indices around the UK

COUNCIL of MORTGAGE LENDERS 9 What does affordability mean? What do you immediately think of and what is always in the press? House Price Indices? Number of possessions? Writs and originating summonses? Fine – but only partial indication of affordability.

COUNCIL of MORTGAGE LENDERS 10 First-time buyer house prices, £

COUNCIL of MORTGAGE LENDERS 11 First-time buyer incomes

COUNCIL of MORTGAGE LENDERS 12 Indices of first-time buyer numbers

COUNCIL of MORTGAGE LENDERS 13 First-time buyer income multiples

COUNCIL of MORTGAGE LENDERS 14 So – is there an affordability crisis? For those already in owner occupation – NO – but increases in interest rates are biting. But what about fall in FTBs? What about affordability for those looking to enter home ownership?

COUNCIL of MORTGAGE LENDERS 15 Affordability indices for Northern Ireland – FTBs

COUNCIL of MORTGAGE LENDERS 16 ROOF Affordability Index Data so far has used income of those who actually purchase ROOF index uses income of working household – i.e. is a better measure for those seeking to enter homeownership Also assumes a standard 15% deposit

COUNCIL of MORTGAGE LENDERS 17 ROOF Mortgage Costs to Income Ratio

COUNCIL of MORTGAGE LENDERS 18 Where do we go with policy? House Sales Recent uncertainty now removed Changes are sensible and were supported by CML Will need to wait and see regarding impact on numbers Need to watch future threats – e.g. Scotland Co-ownership Successful scheme with full support of lenders Single delivery channel Pleased to see certainty of funding – Alan will detail

COUNCIL of MORTGAGE LENDERS 19 ROOF Affordability index around UK

COUNCIL of MORTGAGE LENDERS 20 Indices of first-time buyer numbers

COUNCIL of MORTGAGE LENDERS 21 So – is there an affordability crisis? For those already in owner occupation – NO – but increases in interest rates are biting. For those looking to move or buy their first home – While not a crisis the fall in FTBs is concerning – as is the increase in relative affordability.

COUNCIL of MORTGAGE LENDERS 22 Where do we go with policy? Shared Equity Today – 100% grant funded England – Homebuy Wales – Homebuy + Scotland – Launching HomeStake Northern Ireland? Shared Equity Tomorrow? – Increased Private Finance? In England, Wales and Scotland CML is discussing lender equity loans to enhance current schemes. Should Northern Ireland join the party?

COUNCIL of MORTGAGE LENDERS 23 Contact me or use our website!