The advertisement for Northern Rock’s Together mortgage is a key item of boomtime memorabilia. The campaign featured an untidy twentysomething’s bedroom in a shared flat. The message was clear: don’t bother tidying your room. Instead, escape the debris of your life by borrowing up to 125 per cent of the value of a property under the Together scheme.

Today some Together borrowers may have reduced some of their debt; those unable to do so will be deep, not in clutter, but in negative equity.

The Financial Services Authority (FSA) is now preparing plans for mortgage market reform aimed at putting an end to Together for ever, with a ban on all 100 per cent-plus mortgages. There may also be limits on income multiples, preventing homebuyers from, say, borrowing more than three times their earnings.

Strict curbs on ultra-high-risk lending would help to prevent future boom and bust. But at the same time, the consequences of Northern Rock’s reckless generosity should not be used as a pretext to penalise today’s first-time buyers.

The Treasury, it is rumoured, envisages that the maximum loan-to-value ratio for all borrowers could be 75 per cent. But as Richard Barber, of the estate agent W. A. Ellis, points out, this would mean years of saving for would-be first-time buyers in the lower or middle-income bracket. Currently baby-boomers with cash are outpacing first-time buyers in the pursuit of bargain-priced flats. New figures from the Council of Mortgage Lenders show that 80 per cent of those who do contrive to clamber on to the housing ladder are receiving help from their parents. Is this to be the permanent way of things in the housing market?

Fortunately, FSA bosses do not seem to share the Treasury’s wish to condemn twentysomethings to decades of reluctant renting. Jon Pain, one such FSA boss, argues that banks have more sophisticated ways to assess whether borrowers can afford their mortgage repayments.

The FSA’s reforms must also take into account that households (of all generations) tend to have unsophisticated, yet surprisingly effective, ways to ensure that they do not overstretch themselves when moving to a new home. Evidence of the inclination towards prudence rather than profligacy among homebuyers can be seen in the record £8.1 billion of mortgage liabilities repaid in the first quarter of this year.

The bottoming out of property prices means that there are opportunities for those who would rather not be renting. First-time buyers are already at a disadvantage, however, in the competition for these properties. Even though the bank base rate remained unchanged yesterday, the cost of fixed-rate mortgages is rising and the availability of all loans remains tight for this demographic. These young adults will hope that the FSA’s sophisticated approach to mortgage reform prevails over the Treasury’s belatedly hypercautious — and patronising — stance.

Developers spurn flats for houses

Sightings of vacancies for land managers are yet another indicator of the property market’s new and slightly more confident mood. These professionals — being recruited by developers who have weathered the storm — will be charged with finding attractively priced empty sites. But they will also be looking for sites on which less financially secure developers are already halfway through a scheme — against which the banks might decide not to lend more money. Construction insiders claim that banks are working to pinpoint those projects unlikely to produce reasonable profits.

You may be reading this with a weary sigh, thinking that developers will make the same mistakes again by putting up scores of shoddy flats. But high-density schemes are out of favour. Developers are switching to houses because banks like them.

If you are still worried about the existing glut of flats, you may be relieved to hear that oversupply of such homes in Leeds — which became infamous for its surfeit of executive apartments — is decreasing. Developers who cannot sell appear to be finding tenants. But they are not minded to build more flats any time soon.

Time for a few home comforts

About £20 billion. This is the estimate for the amount that households with variable-rate mortgages are saving each year thanks to lower interest rates. Some of this is being spent on homes; retailers note the popularity of cocooning accessories such as cushions and scented candles. The scent of a £25 White Company candle, for example, seems to reconcile people to staying in more.

John Lewis is calculating that there will be a greater willingness to make larger purchases later in the year. Having shown a stiff upper lip throughout the economic crisis, we will wish to exhibit the same true-Brit spirit in our homeware choices. The chain’s British-made range (pictured) will include the tweed-covered armchair (£750), the Anglepoise lamp (£1,900) and the Best In Show wallpaper (£89 a roll). The £28 Union Jack cushion will be the selection of the borrower whose bargainbasement variable-rate mortgage deal has recently expired.

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