HOUSE prices are hitting such unaffordable levels that households should seek new ways of buying, in a bid to avoid taking on dangerously high levels of debt, the Bank of England’s David Miles said yesterday.
He wants to see a range of shared equity products to leave home owners paying both a mortgage and some rent each month.
The monetary policy committee member hopes it would lead to more affordable housing bills and less volatility in the market.
“Use of outside equity might be a way of permanently bringing down reliance upon debt financing. Switching just 10 per cent or 20 per cent of funding from debt to outside equity very substantially reduces leverage,” Miles told a Dallas Fed audience.
It comes as prices are soaring – in London house prices are up by around 10 per cent in the last year.
Some shared equity schemes are available through the government, but Miles hopes they may be able to be developed privately, too.
The speech came as new figures from Connells Survey and Valuations showed remortgaging levels hitting a record high, rising 55 per cent in the year to October and passing their pre-crisis peak.