Can we blame the
55 to 70-year-old Wellingborough citizens for the current housing crisis in the
town?
Also known as the ‘Baby
Boomer Generation’, these Wellingborough people were born after the end of the
Second World War as the country saw a massive rise in births as they slowly
recovered from the economic hardships experienced during wartime.
Throughout the
1970’s and 1980’s, they experienced (whilst in their 20’s, 30’s and 40’s) an unparalleled
level of economic growth and prosperity throughout their working lifetime on
the back of improved education, government subsidies, escalating property
prices and technological developments, they have emerged as a successful and prosperous
generation.
...Yet some have
suggested these Wellingborough baby boomers have (and are) making too much
money to the detriment of their children, creating a ‘generational economic
imbalance’, where mature people benefit from house-price growth while their children
are forced either to pay massive rents or pay large mortgages.
The issue of
housing is particularly acute with the generation called the Millennials, who
are young people born between the mid 1980’s and the late 1990’s. These 18 to
30 years, moulded by the computer and internet revolution, are finding as they
enter early adult life, very hard to buy a property, as these ‘greedy’
landlords are buying up all the property to rent out back to them at exorbitant
rents ... it’s no wonder these
Millennials are lashing out at buy to let landlords, as they are seen as the
greedy, immoral, wicked people who are cashing in on a social despair.
Like all things in
life, we must look to the past, to appreciate where we are now.
The three biggest
influencing factors on the Wellingborough (and UK) property market in the later
half of the 20th Century were, firstly, the mass building of Council
Housing in the 1950’s and 60’s. Secondly, for the Tory’s to sell most of those
Council Houses off in the 1980’s and finally 15% interest rates in the early
1990’s which resulted in many houses being repossessed. It was these major factors
that underpinned the housing crisis we have today in Wellingborough.
To start with, in 1995 the USA relaxed its lending rules by
rewriting the Community Reinvestment Act. This Act saw a relaxation on the Bank’s lending criteria’s as there was pressure on these banks to lend
on mortgages in low wage neighbourhoods, as the viewpoint in the USA was that anyone (even someone on
the minimum wage) any working class person should be able to buy a home. Unsurprisingly, the UK followed suit in the
early 2000’s, as Banks and Building Society’s relaxed their lending criteria
and brought to the market 100% mortgages, even Northern Rock started lending
every man and his dog 125% mortgages.
So when we roll the
clock forward to today, and we can observe those very same footloose banks from
the early/mid 2000’s (that lent 125% with
a just note from your Mum and a couple of breakfast cereal tokens),
ironically reciting the Bank of England backed hymn-sheet of
responsible-lending. On every first time buyer mortgage application, they are
now looking at every line on the 20-something’s banks statements, asking if
they are spending too much on socialising and holidays ... no wonder these Millennials
are afraid to ask for a mortgage (as more often than not after all that – the
answer is negative).
Conversely, you
have unregulated Buy To Let mortgages. As long as you have a 25% deposit, have
a pulse, pass a few very basic yardsticks and have a reasonable job, the banks
will literally throw money at you ... I mean Virgin Money are offering 2.99%
fixed for 3 years – so cheap!
So, in Part Two
next week, I will continue this emotive article and show you some very
interesting findings on why young people aren’t buying property anymore (and
it’s not what you think!).
