CML reacts to Government's housing announcements

The Council of Mortgage Lenders welcomes the initiatives announced today by the Prime Minister and the Chancellor to increase housing supply and review the flexibility of mortgage funding.

The CML has said for some time that the fundamental cause of affordability pressure in the housing market is the lack of an adequate supply of housing, creating an imbalance between supply and demand. The new prime minister's immediate focus on housing supply is therefore welcome.

The Treasury announcements relating to covered bond legislation and the forthcoming review of wholesale funding are also welcome. But it is difficult to assess their potential impact on the availability of long-term fixed-rate mortgages at this stage. The CML looks forward to seeing more detail and discussing the issues in more depth with the Treasury.

CML senior policy adviser Rob Thomas said: "Innovations in mortgage funding are a key driver for new types of mortgages, so the Treasury is right to examine this area closely. But the issue is just as much about the consumer appetite for long-term fixed rates as about how they are funded.

"It is too early to say whether these announcements will create a significant shift in the design of the mortgage products of the future, but we welcome the government's willingness to look at the funding side and we also welcome the renewed focus on increased housing supply."