Property and Prejudice the continued reticence of the banks to offer sensible mortgages

Posted 1 March 2011 by Neil Moore

Property and Prejudice

Neil Moore comments on how the continued reticence of the banks to offer sensible mortgages - other than to those with large deposits – may risk changing the way many of us look at property ownership.

It is a truth universally acknowledged, that a single family in possession of a good mortgage must be in want of a house.  Thus a Jane Austen novel on the property market could have begun.

Sadly today there are plenty of families wanting a house, especially with affordability at near-record levels, but few can get hold of a mortgage.

Austen knew a thing or two about property, or at least the importance of owning it. Her novels had a great deal to do with its acquisition.  Although her preferred route to ownership was largely through marriage, she would have understood about financing a property purchase through a mortgage as her life coincided with the advent of the building society movement.

Austen understood that social status played a major role in owning or aspiring to own property. Above all perhaps, she understood that an individual’s or family’s financial circumstances played a pivotal role in determining where and how one lived - and how one was seen to live. She certainly knew the value of a fine location and the benefits that well-proportioned rooms and good natural light bestowed upon occupants.

This understanding seems as apt today as it was when Jane Austen was alive in the late eighteenth and early nineteenth centuries.  The desire to house one’s self and/or one’s family comfortably, and the pleasure that a well-designed house gives to its owner - both socially and materially – seem largely unaltered.

But two things have changed.  Residential property no longer just demonstrates wealth but creates it, and thus makes it even more desirable.  Also, the de-mutualisation of the building societies and their takeover by banks, together with the ongoing credit crisis, is threatening the way we think about owning property.  In 2011 this means that, unless the government and the banks take urgent steps to reverse the situation, for the first time in over two hundred years it will only be the already well-off who can realistically afford to buy property.

Building societies were created to allow their members to buy property.  Banks were created to make money for their shareholders.  Building societies were prudent and fiscally responsible.  Banks clearly haven’t been and are a perfect example of pride coming before a fall.  To extract themselves from the trouble they are in the banks are now prejudiced against the very people the building societies were formed to assist.   Jane Austen could have written a book about it!

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