UK borrowers may see the return of larger, longer-term loans as the government plans a comprehensive review of the mortgage market with the aim of boosting access to finance for first-time buyers. Rather than addressing the real problems with UK housing affordability though, this approach seems to be aimed at helping dig the government out of a housing policy hole.

Last May, Michael Gove, the secretary of state for Levelling Up, Housing and Communities, announced that the government’s housebuilding target “risks making someone’s perfect arithmetic the enemy of the common good”. This statement has been widely interpreted as signalling the end of a Conservative Party manifesto commitment to deliver 300,000 new homes annually in England by the mid 2020s. It also follows the abandonment of planning reforms in May that were unpopular in Tory heartlands and were a significant factor in the party’s loss of the Chesham and Amersham by-election last year.

By increasing housebuilding rates, the government wanted to tackle the decline in housing affordability that has been driving down UK home ownership rates. Whether the government was right to place so much emphasis on planning reform is questionable, particularly considering the housebuilding industry consistently fails to build enough houses to match the units of planning permission awarded. Research also shows it takes an awful lot of additional housebuilding over a sustained period to make material differences to affordability.

Abandoning the housebuilding target leaves the government without any meaningful response to the affordability crisis, however. This has led to the government’s new emphasis on the mortgage market: if people can borrow more, then more people will be able to afford to buy houses.