Letter: Banks must free up mortgage bottleneck

If anything, this is an understatement and a source of great irony that the constituency group - funders - whose pre-recession actions many would consider as the catalyst for our present economic woes are now instrumental in throttling the aspirations of a group whose activities, if encouraged could stimulate not only the housing market but also that of other industries with which its fortunes are so closely associated.

Deposits of up to 20 per cent from first-time buyers are a convenient smokescreen for the banks' current lack of activity in this vital market. Even in previous times of hardship, I cannot recall demands for deposits of this size for domestic mortgages and the government should be making it a priority to thrash out with the bankers just exactly what is stopping them returning to realistic lending practices which are so vital to the wider well-being of the economy.

It should start by demanding that lending to first-time buyers on the government's low-cost initiative for first time buyers (Lift) scheme, whereby typically loans for 70 per cent of a property's value are sought - the remainder being put up by the government - remains free of a, frankly, unnecessary requirement for a deposit between 5 and 10 per cent.

The government's 30 per cent is already providing enough security for the lender in these instances but still, by its lack of action, it appears to sanction these unrealistic demands for sums of between 5,000 and 12,000 from the very group who are least likely to have access to that kind of cash - graduates, key workers and those at the lower end of the earnings scale - for whom the Lift scheme was designed.

If this bottleneck can be unplugged, then those buyers will be free to direct their limited disposable income at the kind of items they will need as they start on the house buying ladder: the white goods, furniture, carpets and curtains, all of which stimulates an increase in the buoyancy of these industries and provides a much needed boost to the economy.

Oh, and the people who are selling to the first-time buyers? Well, they themselves are free to move up the property ladder and so it goes on.

I want to believe the government is genuinely "determined to do all it can to stimulate the housing market" as its spokeswoman states in the article.I just can't reconcile this statement though with the government's apparent lack of engagement with the very group who seem to be unilaterally applying management of perceived risk in a manner which is stymieing a flagship housing policy.

Why is a registered social landlord, whose main activity is letting affordable housing to those most in need, interested in this topic? The answer is that if those first-time buyers whose home-owning aspirations continue to be strangled at birth by restrictive and unrealistic lending practices, then inevitably they will turn to the social and private rented housing markets to meet their housing needs, and there are some 300,000 people in the country already there before them.

MIKE BRUCE

Chief executive, Weslo Housing Management

North Bridge Street

Bathgate, West Lothian