National Institute Economic Review
|Primary Author||Angus Armstrong|
Housing finance has long been recognised as a particular weakness of the UK economy, associated with demand and house price booms and busts for decades. The lack of regulatory response to innovations in housing finance over the past two decades has allowed the system to become even worse. There remains a particular shortage of affordable long-term fixed rate mortgages, the supply of mortgages is influenced by the animal spirits of high yield investors and wholesale funding vehicles directly contributed to the fragility of banks’ balance sheets.