ODPM report: low demand is not rooted in lack of mortgages

Lack of mortgage finance is not stifling the housing market in low-demand areas, a government report has found.

The study, commissioned by the Council of Mortgage Lenders and the ODPM, looked at whether a shortage of financial products was affecting demand for housing in the nine market renewal pathfinders in the North and Midlands.

It found there was an adequate range of mortgage and finance products but lenders could make them more widely available. There would be scope for new products as the pathfinders developed, it added.

The leaders of the pathfinders said the research confirmed their views.

Mike Gahagan, chair of the pathfinder Transform South Yorkshire, said: “Their finding was: do not waste time trying to get new financial products because there is such a range out there. We came to the same conclusion. It’s good news in that it’s one less thing to worry about.”

The report also recommended that lenders help to guide the strategies of the pathfinders. Many already do so by sitting on pathfinder boards.

It said residents whose homes were purchased for demolition needed more information about financial products and help to tackle negative equity when buying new homes. The main solutions to low housing demand lay in the demolition and refurbishment of housing, the report added.

Regeneration minister Jeff Rooker said: “We want to encourage lenders to work with the pathfinders so they play an even more active part in renewal. Giving people greater housing options and more ways of financing them is also more likely to encourage them to stay in an area.”

Peter Williams, deputy director general of the Council of Mortgage Lenders, said: “Lenders remain alert to the need to explore new options with the government and others. They recognise that local communities often suffer from a raft of problems, rooted in a struggling local economy, and that it requires a concerted effort from a range of parties to sustain revival. Happily, a lack of mortgage finance is not one of the problems.”