The outrage that has accompanied the news that mortgage applicants are to be asked “intrusive” questions about lifestyle is born of a misplaced sense of entitlement. A home may be a human right; home ownership isn’t. How can it be so?
For a start, if a financial institution is prepared to lend you the thick end of a quarter of a million pounds to buy a starter home, and you put in a grand or something, it seems entirely reasonable that they should ask you about how much you’ll be chucking away on scratch cards, fags and booze.
Indeed, it would be quite in order for the bank to ask you to do a couple of beat-box numbers in the reception area if they wanted to. The sense of entitlement expressed by today’s twentysomething is creating much misery.
I have great sympathy with them, and am guiltily aware that my generation “ate their lunch” when we plundered state industries and the old buildings societies for a quick buck through stock-market sell-offs; we enjoyed tax relief on our mortgage interest repayments (I know, I know); had full-blown student grants (including housing benefit during vacations); and even a pension at 60 or 65 linked to salary.
The 1970s and 1980s weren’t as bad as some have made them out to be. We were spoiled. But it was a land where we expected to buy our first home in our thirties or even forties rather than our twenties.
The “intrusive” questions of today are a substitute – and an inadequate one at that – for the old building society practice of requiring a would-be borrower to maintain a deposit account for years, clearly demonstrating a propensity to pay a sum similar to a mortgage repayment regularly. If they could manage this, and having got to know them over that time, further inquiries could be dispensed with.
Then, as again now, the manager would need to know how a borrower might cope if interest rates rose; perfectly prudent for all sides. But the system had turned chaotic by the 2000s. The last time I got a mortgage, in that boom, it was through e-mails to a broker, and I never met anyone to discuss the loan. We also had something called “self-certified” mortgages, where you could just declare your earnings, no proof needed. Hence the worst banking crash in a century.
Now we are moving back to saner, more traditional ways. An older generation of stand-up comic often had lots of gags about newly-weds having to live with their in-laws during the first days of marriage life. Indeed it may well be that this was the genesis of the “mother-in-law” jokes that sustained the careers of many a comedian into the 1980s.
As remote and quaint today as a Donald McGill seaside postcard, half-crowns and MySpace, the idea of returning from honeymoon to move into a spare room in someone’s parents’ cramped terraced house is anathema to the children of the Thatcher era. That is – understandably enough – why they resent even the most timid checks on their reliability, which unfortunately shades into that sense of entitlement. They need a better sense of social history.
There is more to it than that, though. Property has become the only way to become wealthy in 21st-century Britain. In the past it was only one way to do so, along with securing a good job, investing in a pension, and saving, maybe through an investment or unit trust. Now, thanks to the mess the financial sector got itself into, pensions scandals and the wider inability of our economy to sustain a strong middle class, other, supplementary, routes to financial security seem shut off.
Plus if tomorrow’s graduates do earn a decent salary, the student loan repayments will be taking an extra slice out of their disposable income.
Renting is so expensive that you cannot save for a deposit; hence the urgent demand for 100 per cent loans (and 120 per cent from Northern Rock in the boom, remember). Right now too there is clearly a bubble mentality, especially in London – “If we don’t buy now we’ll never be able to”.
Newspaper headlines recklessly promise decades of unbroken property rises (just as they predicted the opposite a couple of years back). Residential property is, uniquely, free of all capital gains taxes and the only investment you can live in and enjoy, and politics means it is likely to stay that way.
The property obsession is, then, mostly rational for individuals, even if mostly madness for society as a whole, something the Bank of England understands very well, and hence these new checks on borrowers. I wonder if they, like me, prefer the world of Les Dawson.