“Residential construction may be growing at the fastest rate in a decade, but George Osborne is right to make clear that it is “not enough” to build homes if people cannot afford the deposit. The second phase of Help to Buy has begun to help tackling this problem with a visible increase in 95% LTV mortgages on offer both inside and outside of the scheme. The arrival of further participants this month is a welcome sign that choice and pricing will continue to improve.
“Confirmation of new powers for the Bank of England to control asset price inflation makes clear that the mortgage market will not be left entirely to its own devices as it recovers. Both government and bank now have housing and mortgages firmly in their sights and this puts a considerable responsibility on the industry. The Bank itself must now take care to ensure further interventions are based on good evidence and do not to stifle a recovery that is yet to be realised in full.
“Stable growth must remain the priority, and with mortgage lending on the rise, it is time to redouble construction efforts to marry up supply and demand. The decision to offer a further £1bn to ‘unblock’ housing projects in northern cities will help to encourage growth on a national level, but continuing private investment will be needed – and on a far greater scale – to avoid a permanent decline in home ownership.”