BSA launch affordable housing report

The lack of flexibility associated with the Government’s affordable housing programmes was identified as the key barrier to greater involvement in the schemes by lenders at the launch of a BSA report on lending for affordable housing by societies - Stepping up to the Mark.

Although societies reported that demand for the products was high, the complexity of the schemes meant that potential purchasers were either put off applying for a mortgage or in many cases found that they were able to use a product from the society’s conventional mortgage range.

The political risk of involvement was also felt to be high, with politicians making regular changes to the ways that the schemes work, while other public sector organisations, such as housing associations, provide a further complication and further increases the complexity of shared ownership applications.

At the breakfast to launch the report the former Housing Minister, Nick Raynsford, commented that the schemes had been introduced to bring simplicity to the market, but noted that the complexity of the schemes serves to confuse applicants.

The possibility that lenders were encouraging people to take out loans that they are not able to afford, was also raised. However, it was noted that far fewer 100% mortgages are now being sold than previously, while the use of affordability models meant that loans could be given to people at high income ratios that were still affordable for the borrower.

Representatives from English Partnerships, the House Builders Federation and CDC Co-Operatives all outlined their own schemes that are designed to help people afford to buy. They noted that these schemes had been developed jointly with lenders and this had contributed to their success.

The event concluded with a discussion about how the credit crunch would impact upon the housing market. It was noted that building societies are in a very good position compared to many wholesale funded competitors, but that the Bank of England needs to ensure that confidence is restored to the market in general.

To view the full report follow the link below -