David Miles Speech on Mortgages, Housing and Monetary Policy

Date Published 11/23/2011
Author Marja Hoek-Smit
Theme Housing Finance Policy
Country United Kingdom

In a speech for the Northern Housing Consortium, David Miles assesses the “extraordinary period of readjustment” in the UK housing market and the consequences for the future rate of home-ownership. “As a result of the major changes in financial markets in the wake of the crises of 2007 and 2008 the ways in which home-ownership is financed are changing. Many of these changes will be permanent. More equity will be used by new buyers to finance house purchase than was typical in the years before the crisis. Some of that equity will come from outside financing – which creates benefits in terms of risk sharing. But much will have to come from buyers. That is likely to mean a lower rate of owner-occupation and a bigger rental sector. Today this is causing severe transitional difficulties. But in the longer-run this is not likely to be a source of major net losses. To the extent that it offsets tax distortions and creates a more stable housing market it will create some gains. Monetary policy may need to re-calibrated; but it will not be less effective.”

Read full speech.

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