Building societies calls for looser mortgage regulation to fix ‘broken housing market’

Successful first-time buyers rely on Bank of Mum & Dad and have two above-average incomes, leaving those without help, or single, stuck in the rented sector.

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The Building Societies Association (BSA) is calling on the Government to urgently commission an independent review to set out a long-term strategy that will increase the number of first-time buyers within the housing market.

Its latest first-time buyers report says that significant changes are required to help first-time buyers get onto the property ladder and warns that policy solutions mustn’t compromise the homeownership prospects of future generations.


Building societies are responsible for around one-third of first-time buyer mortgage completions and whilst they have the capacity to lend more to first-time buyers they say ‘radical reform is needed to fix our broken housing market’.

The report, written by housing expert Neal Hudson, finds that the ability to become a first-time buyer is increasingly dependent on the so-called Bank of Mum & Dad, while successful first-time buyers increasingly need to have two incomes that are higher than the average.

Meanwhile, those without family help, are single or on lower incomes are being excluded from homeownership.

The biggest challenge facing first-time buyers is affordability – both affording the cost of buying a home and the cost of owning a home and saving for a deposit.


Alongside policy action, the BSA says regulatory changes are needed particularly to support those on the fringes to buy their own home.

Since the financial crisis lenders have had to adhere to stricter regulatory controls rather than the social benefits of higher rates of homeownership. Now the BSA says it’s time that pendulum swung the other way to increase the availability of 95% loan-to-value mortgages.

Other areas of regulation where more flexibility is required include the cap on high loan-to-income lending while a review of the pre and post-retirement mortgage market would also ensure lending regulations better reflect the increase in longer mortgage terms and the ageing population.

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Paul Broadhead, The BSA
Paul Broadhead, The BSA

Paul Broadhead, Head of Mortgage and Housing Policy at the BSA, says: “A properly functioning housing market is dependent on first-time buyers being able to afford their first home.

“Whilst building societies are creating bespoke, targeted innovations within the current regulatory framework, new thinking and radical changes are needed.”

He adds: “There is no silver bullet to increasing first-time homebuyers and it won’t be possible to help everyone who wants to become a homeowner in the current high price-to-income housing market. But there are many things that can help to fix the broken housing market. That starts with changes to regulations and support schemes that not only help today’s first-time buyers, but don’t fail future generations.”

The Intermediary Mortgage Lenders’ Association (IMLA) has also backed the reports findings

Kate Davies, IMLA

IMLA Executive Director Kate Davies says: “The UK is an advanced economy which is home to one of the most diverse, competitive and innovative mortgage industries in the world. And yet we are in the midst of a housing crisis, with fewer affording to buy a home, and more renters struggling to secure accommodation.

“There is a viable argument for Government-backed first-time buyer support, which must be accompanied by a sustainable plan to deliver more quality, affordable housing on a major scale, in both the private and social sectors.”

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