Yesterday’s housing strategy offered a mortgage guarantee for first-time buyers of new
properties, one of the few new announcements in a document largely consisting of re-hashed policy. At best, the mortgage guarantee helps to provide a boost to house builders and welcome relief for
some credit-worthy borrowers who simply can’t build up a sufficient deposit. At worst, it encourages risky lending, subsidises high house prices and raises unrealistic expectations for young
families.
Unaffordable, reckless lending (at least, up until the credit crunch and collapse of the sub-prime market) threatened the stability of the financial sector and caused misery to thousands of homeowners who later found themselves falling behind on payments and threatened with eviction.
The housing strategy itself quotes the estimated figure of 800,000 recent buyers who are in negative equity and unable to trade up to a larger home – but then sets out to get more people into homeownership without an equity cushion to fall back on.
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