CBI urges Government to boost housing market
The Confederation of British Industry (CBI) is calling on the Government to launch new initiatives to boost the ailing housing market, suggesting it could help economic growth.
The business lobby group wants Chancellor George Osborne to launch the fresh initiatives in his autumn statement, which will be delivered later this year.
In a speech to the CBI North-East Annual Dinner last night, John Cridland, director-general of the CBI, said: “Without a steady stream of eager first-time buyers the housing market stagnates and our whole economy suffers.”
Mr Cridland added: “A way of helping first-time buyers to access finance to get on the property ladder could be to allow them to access locked savings in their personal pension pots through a loan-back scheme.
“Members of company schemes could borrow money from their own pension pot at a low cost, paying the loan back through their salary at any time during their working life.”
Mr Cridland is calling on the Government to consider introducing a new Mortgage Indemnity Guarantee (MIG) scheme and more shared ownership schemes, in order for many to get onto the property ladder.
Cridland says: “Now is the time to stop the stagnation and get the housing market flowing again. The CBI wants to see a revitalised MIG, to reduce the risk of higher LTV mortgages.”
The UK housing market remains under pressure due to a lack of demand, unaffordability and a lack of mortgage products.
Mortgage approvals are picking up but are well below levels seen prior to the financial crisis.
First-time buyers have to put down an average deposit of 20% in order to secure a mortgage, according to the latest figures from the Council of Mortgage Lenders (CML).
The CML also said with house prices edging higher for the year to date, the average new mortgage has gone back up to £120,000, meaning affordability remains a major issue for first-time buyers and home-ownership becomes out of reach for many.
The CBI believes by boosting activity in the housing market, it could be a “game-changer” for economic growth.
Last month, the business group predicted the UK economy will grow by 1.3% this year, down from its previous forecast of 1.7%, made in May.