Boosting home-ownership requires more than just boosting supply.
Supply side housing reform is welcome, but without expanding mortgage availability progress will be limited.
It’s all about housing this week for the Government.
Banning no-fault evictions, conversions of shops to homes, incentives for brownfield development, presumed approvals for sustainable development, tinkering with Stamp Duty.
This is part of the Tory fightback to address its terrible polling numbers amongst the under-40s. In a wide-ranging interview with the Sunday Times, he described the housing crisis (read homeownership) as an issue that millennials and Gen Z would never forgive politicians for neglecting. Arguably he is right.
All of this supply-side reform is aimed at boosting housing numbers, still woefully short on what is needed after the abolition of national targets. But does it address the fundamentals of affordability for a generation for whom homeownership remains a pipe-dream?
Arguably the most interesting development in housing over the month was the news that Dutch-style mortgages, where interest rates reduce as the capital balance is paid off are coming to the UK, thanks to April Mortages. The typical deals will last for far longer than the 2 to 5-year rate periods offered by most UK high street lenders.
There are also new challengers offering very long-term fixed rate deals to borrowers who value certainty, or who need to borrow up to six times their salary.
The emergence of lenders who are willing to support what has pejoratively dismissed as the sub-prime market is a welcome development. Like shared ownership borrowing, this is still low risk territory, and a world away from the high stakes lending that brought down Fannie Mae and Freddy Mac in the 2008 global financial crisis.
But it begs the question, why isn’t the Government doing more to expand this type of mortgage availability?
While interest rates remain high it’s going to take more than a short-term Stamp Duty fix, or a relaxation of planning rules to get people into home-ownership.
