UK Government's new mortgage rules will fuel house price bubble, harming first time buyers

WESTMINSTER, U.K. - Rezul -- The UK Government today came under fire for initiating new measures to relax mortgage lending, a move critics say contradicts the government's goal to make homes more affordable for first time buyers.

Looser mortgage lending rules will allow first time buyers to secure larger mortgages, inflating house prices – which will burden first time buyers with more debt, while pushing the dream of homeownership even further from future purchasers.

The current UK Government has repeatedly promised to tackle the housing crisis by increasing supply and making homes more affordable, at a time when average UK house prices have already reached a record high of £270,000 according to recent data from the ONS.

"Yet house prices will rise if you stimulate demand by easing mortgage lending rules in a supply-constrained market, harming first time buyers trying to get on the ladder," said a spokesperson from EcoCognito, a consultancy that works with housing issues.

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"Which begs the question: Where is the due diligence? Where is the modelling utilised by HM Treasury, the Bank of England, and FCA, to evaluate the harmful impact of looser mortgage rules on first time buyers and the wider economy? We have requested this information but have received no detail."

"And what role did the banks and other mortgage lenders play in the formulation of this looser mortgage lending approach from the government? How did they lobby for this shift?"

"The UK Government's approach demonstrates a fundamental disconnect – they are attempting to create the impression of progress without addressing a key driver of the housing affordability crisis: the pumping of mortgage-lending cash into a finite market, which has increased house prices to unaffordable levels."

"Instead of joined up thinking, it appears we are getting yet more policy failure from the UK Government – harming first time buyers like so many other initiatives (https://www.ecocognito.com/twitawoo/post/britai...) over the last few decades."

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"A significant loosening of mortgage lending rules, without any corresponding increase in housing supply, will inflate house prices significantly while leaving mortgage borrowers over-leveraged and at an increased risk of default and repossession."

"Moving beyond the issue of first time buyers, the current UK Government has a very poor overall track record when it comes to affordable housing, yet now we are hearing speculation they may water down affordable housing targets and also note that the number of homeless children in temporary accommodation has just reached a record high of 172,420 in England."

ENDS

Visit https://www.ecocognito.com/twitawoo/post/uk-gov... for full release.