Home economics Financial policies to increase homeownership

THE SOCIAL MARKET FOUNDATION The Foundation’s main activity is to commission and publish original papers by independent academics and other experts on key topics in the economic and social fields, with a view to stimulating public discussion on the performance of markets and the social framework within which they operate. [...] Currently, this risk is held by the government with costs, included the expected losses, capital to provide the guarantee, and the administrative costs, paid for by lenders in the form of a commercial fee.13 As observed in Australia and New Zealand, while government provision means first time buyers do not pay a fee, it also limits the amount of buyers who can benefit from the scheme. [...] Just 34,000 households are in mortgage arrears, equating to 0.5% of total mortgages, implying there is room to increase the proportion of payments and decrease the size of the deposit for a large amount of households. [...] 100% mortgages were available prior to the financial crisis, but it has taken until 2023 for one or two such products to return to the UK market.19 95% LTV products are possible, but the higher the LTV, the less favourable the borrowing rates are, and the harder it is for low income households to access them. [...] Such liberalisation would follow the policy of the United States, which has a larger proportion of mortgages on long term fixed rates.27 This would require lenders to take on more risk due to the chance the base rate is higher than anticipated over the term of the loan.