Housing Risk and Opportunities: Reforming Mortgage Finance
In the 1990s, home ownership has become risky for many people. Interest rates may be at a thirty-year low and house prices at last beginning to rise, but the forces shaping the next housing boom and bust are already at work. The next government must act early if it is to avert another housing market crisis.
This report analyses the risks to home owners, examines the forces driving the housing market, explains why the next government should act, and suggests what action it could take to avoid the dangers ahead. At the heart of the report’s argument is that there will be major risks in the future and that it is the home owner, rather than the mortgage institution, who currently bears all these risks. Action by the lending institutions themselves will be insufficient, in part because they will be grappling with their own problems of chronic over-capacity. Government action is needed to anticipate the future problems, lessen the risks, and ensure that these are not borne solely by the home owner.