Douglas Carswell's Blog

Isn't this Fannie Mae lite?

Today the government unveils a scheme designed to help home-buyers who might not otherwise be able to buy a home.

Isn't that what Fannie Mae was supposed to do? How did that turn out? 

This time it is different, apparently. This is not about subsidising lending to those to whom private lenders would not freely lend.  Oh no. This is about removing barriers to home-ownership. In particular that big deposit barrier, which keeps getting in the way of wider home ownership.

Surely one of the biggest barriers to wider home ownership is price? With lots of cheap credit out there over the years, house prices have risen as more and more people are able to assume greater debts. Those unable – or unwilling – to take on such large mortgage debts, therefore find themselves unable to buy.

But how does a scheme that will push up the price of houses address this problem? Surely taxpayer-backed deposits will push house prices even further beyond the reach of many families?

One of the reasons I have consistently supported the liberalisation of planning rules is because we keep being told that removing these arcane restrictions will unleash pent up demand for new homes.

Yet one of the justifications for today's announcement is that government-backed deposits are needed to encourage more building.  It rather sounds as if the state is having to underwrite a lot of the lending in order to get these things built.

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