mortgages at fixed interest rates, and then selling those loans to investors seeking long-dated returns, such as pension funds. Yet this market is untested.
The quickest fix would be for the government to step in by providing guarantees. Under Johnson’s predecessors, David Cameron and Theresa May, the British government guaranteed over 270,000 “Help to Buy” mortgage loans in which the government takes the risk on the most vulnerable slice of a 95% mortgage.
Like all government interventions, “Help to Buy” can push up house prices. Therefore, any new mortgage subsidy will have to go hand in hand with a substantial house-building programme. Ideally, cheap loans would only be available on new properties. That would make it harder for Johnson to achieve his 2 million target, but it could still be a step forward.