Prisk: We won’t go back to 100% mortgages

With lenders starting to operate in what was once deemed the sub-prime market, Housing Minister Mark Prisk has said the government will not allow the industry to go back to the days of 100% mortgages.

Speaking at the Royal Institution of Chartered Surveyors national residential conference the Housing Minister said that people still need support to purchase a home.

However the Housing Minister said that the government would endeavour to support those people through schemes such as Help to Buy.

He said: “Many people still require support, to secure the home they need. That does not mean returning to the bad old days, before the credit crunch.

“The regulatory rules then were completely inadequate, with self-certification of incomes and 100% mortgages. We’re not going back to that.

“But there is a role for government.”

The minister said the government’s Help to Buy equity loan scheme is a good example of what the state can do to support homebuyers.

He said: “It’s about helping people plug the deposit gap and it’s proved tremendously popular. I can tell you today that in its first 12 weeks, since being launched, just shy of 7,000 reservations have been made.

“With over 400 house builders signed up and most of the major lenders on board, it’s clear that Help to Buy is living up to its name.”

Prisk said that the government has heard from many major builders who have said that Help to Buy has boosted their sales.

Whilst Prisk said the boost was welcome he called on builders to speed up their building rates.

The minister said he will be inviting leading builders to meet with him so they can tell him how they intend to turn this new demand into more homes.

He said: “It’s time they raised their game. They tell me that’s what they want to do. Let’s make that happen.”

Peter Lawrence at Lawrence Rand said “The Minister has not said anything that was unknown before and he is quite right to pour cold water on any thoughts of returning to a market of irresponsible lending. Help to Buy is, of course, as much about helping the house builders as it is first time buyers and support for buyers must be matched by an increase in supply otherwise Government support will simply help drive prices upwards.

The extended Help to Buy scheme starts across the entire market in January 2014 and has the potential of boosting activity further although the biggest boost will come from the growing confidence in an improving economy that we are already beginning to see.”