Redrow boss blasts mortgage shortage

Grant Prior 12 years ago
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Redrow chairman Steve Morgan has attacked the lack of mortgage availability for first-time buyers and warned that new lending rules mean the “medicine risks killing the patient.”

Morgan said: “Our frustration is that due to the current mortgage crisis we are not able to grow the business faster.

“Every week we are forced to turn away potential purchasers simply because they do not have a deposit of 25% or more; people with excellent jobs who under normal circumstances would easily qualify for a mortgage.

“For generations 95% mortgages have been the norm.  Indeed the vast majority of existing home owners started out buying their first home with a mortgage of this size.

“Yet the current generation of first time buyers are being denied the opportunity that their parents and grandparents took for granted, simply because they are unable to secure an affordable mortgage with a modest deposit.

“The demand for new homes remains strong, but with only six lenders now covering over 90% of the lending market, the mortgages to meet that demand are not available.

“In the last three years the number of mortgage products available to buyers with deposits of 5% or less has fallen from 1,224 to just 33.  The situation could get a whole lot worse if the FSA’s proposed changes in its Mortgage Market Review come to fruition.

“The case for resolving the mortgage crisis is compelling as we cannot have a buoyant UK economy without a healthy housing market.

“Each new home creates around six jobs, both directly and indirectly.  Building an extra 100,000 new homes per annum to meet the country’s desperate needs will create around 600,000 new British jobs and all the tax revenues that go with it.

“The Coalition Government has stated publicly that it is committed to an increase in the construction of much needed new homes and we strongly welcome that commitment.

“However this will simply not happen without an adequate and fairly priced supply of mortgages.  At the very time when the country is in a housing crisis, the house building industry is working at little over 50% of the output of just a few years ago.

“Our message to the Government is simple:  the regulators are going too far and the medicine risks killing the patient.

“Deliberately suppressing housing demand at the very time that the country has a chronic housing shortage is laying the foundations for the next boom/bust cycle.

“The way to end the cycle of boom and bust is to increase the supply of new homes to meet the demand by freeing up the supply of affordable mortgages.”

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