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Housing Policy Refocus Needed as FTB Numbers Remain Flat

Record mortgage affordability is keeping the housing market afloat, but current housing policy needs to be revised to meet homeownership targets according to a new report by the Intermediary Mortgage Lenders Association (IMLA).

The third of IMLA's annual reports - The new 'normal' prospects for 2016: is the march back to a sustainable market on track? - examines trends in the mortgage and housing markets, and the potential impacts of recent policy changes, in order to assess the strength of the post-recession recovery.

Overall, it forecasts a continuing recovery in mortgage lending during 2016 and 2017, with a particular pickup in lending for house purchases by owner-occupiers from an estimated £142bn in 2015 to £155bn in 2016 and £169bn in 2017.

However, reviewing 2015 activity, the report finds that even though mortgage affordability has hit its highest level ever, with buyers spending a record low 8.6% of their income on interest by Q3 2015 and even first time buyers spending only 9.7% by November, first-time buyer numbers have fallen marginally year-on-year, suggesting the government may need to revisit housing policy to successfully increase owner-occupation levels.

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