According to a report from dear old JRF, there is an urgent need for 'reform' to prevent another bout of boom and bust in the housing market. This seems to be the gist of their proposals:
Credit controls, such as maximum loan-to-value mortgage ratios, should be considered, the report argues. The taskforce acknowledges this could restrict access to mortgages but says reducing volatility is ‘in the wider public good.’So we ration mortgages in order to prevent house prices rising and instead shove people into a tenure that isn't what they prefer:
The report says more social rented housing with secure tenure is required as it is the most suitable option for households which seek long-term security but cannot access the mortgage market.
And to do this we need more government spending:
The report says this can only be delivered if there is sufficient subsidy.
Finally, to cap it all we further hobble the mortgage market by removing any downside to borrowing (remember dear reader that this was one of the problems with the US sub-prime market and look where that got us):
The report also argues for a better safety net for borrowers, including making sure borrowers have more information and tools to assess mortgage affordability and a partnership insurance model which would provide cover for mortgage capital and interest payments in the event of loss of income through redundancy, sickness or accidents.
So there you have it - government-approved mortgages, subsidised house-building in the wrong tenure and a 'safety-net' that will act to raise the cost of borrowing. All underlined by a steady increase in government spending on housing. And these people think that will "stabilise" the market?
Do remember, of course, that Joseph Rowntree own thousands of houses for rent and are a significant developer in that sector. So maybe this is just self-interest!
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