Mortgage lenders and the finance industry have got to be more innovative to help people onto the housing ladder, rather than locking people into massive cycles of debt and the danger of repossession, Places for People has warned.
The housing and regeneration group is responsible for 58,600 properties across the UK, and is using this weight to call on the housing sector to introduce greater financial flexibility and support, rather than simply increasing standard income multiples to cover mortgage borrowing costs.
The news comes after an Abbey national survey found that over 7.4 million people cited rising house prices as the main reason for not being able to step onto the property ladder, leading them to increase the rate at which people can borrow to up to five times their income.
In July 2006, Places for People launched a range of financial products to its customers, including personal and small business loans and mortgages, in a bid to increase home ownership and also prevent people relying on high interest doorstep credit lenders.
It is the first time a housing organisation has directly offered its customers mortgages, and the first mortgage sale is expected to be completed within the next three weeks.
David Cowan’s, chief executive of Places for People, says: “Since 1997 we have seen over 1 million homeowners climb onto the property ladder, yet there are millions more who are deterred from doing so because of rising house prices.
“The finance sector should be offering a greater range of flexible finance products to give customers choice, and then be ready to support them should they experience changes to their financial circumstances.”