Agent welcomes pension pot plan

Brian Holt, whose company has offices in Leamington, Kenilworth, Earlsdon and Coventry, said that while he applauded the concept of revitalising the housing market the longer term consequences had to be taken into account.

He was speaking after a suggestion to remodel the mortgage market by enabling first time buyers to tap into their pension pots in order to fund their homes was made by the CBI (Confederation of British Industry) director general John Cridland.

Brian explained: “I would very much welcome some help to support the marketplace, but one should keep one’s eyes on the consequences. The ‘70s experience set an interesting lesson.

“The natural knee jerk reaction to the problems faced by first time buyers is to allow them access to higher mortgages,” said Brian. “But of course that is one of the reasons we saw massive price rises followed by falls. The fact is people were allowed high loan to value mortgages and borrowed multipliers of as much as five times their salary. Demand pushed up prices and when people could no longer afford to make the payments, down the prices came again.

“If the Government artificially adjusts the mortgage market and supports high LTV mortgages, then that will enable those who meet the criteria to borrow enough to buy. Therefore demand increases relative to supply and prices will increase more than they would have, or decrease more slowly.

“If they in effect subsidise new houses, then when the purchasers come to sell, they may find that they cannot sell at the price they paid unless the market prices have moved up significantly. Another case of unintended consequences. Kind thoughts, but damaging outcomes. Remember you often have to be cruel to be kind. And if they exhaust their pension pot to buy now, how will they fund their retirement? Are we just relocating financial issues from one generation to the next?”

Pictured: Brian Holt