BSA head of mortgage and housing policy Paul Broadhead (pictured) also called for the Help to Buy scheme to be revised and eased down to wean the housing market off it.
“The fate of this scheme after 2021 was always going to be difficult, but in my view it should not become a permanent part of the market,” he said.
“Tapering it down could be one option. When Help to Buy (Scotland) was launched in 2013, it had a price cap of £400,000, this has been reduced to £230,000 allowing more people to benefit from the available funding and targeting it at lower income families and first-time buyers.
“Another option could be to reduce the equity loan available from 20% to a lower amount.”
He added that the government would need to give plenty of warning to allow the industry to adapt.
“Now would be the time for the government to make its intentions for the future of Help to Buy: Equity Loan crystal clear,” he said.
The BSA’s Property Tracker, conducted by YouGov, asked 2,000 adults whether they agreed or disagreed that now is a good time to buy a property in the UK, with 4% more disagreeing than agreeing, down from -1% in June.
This was the first-time since 2014 that mortgage affordability was a greater concern to borrowers than being able to access a mortgage – although raising a deposit continued to be the biggest concern.
The BSA suggested this could have been prompted by the Bank of England’s decision to increase the Base Rate from 0.5% to 0.75% in August.
Overall, 48% of consumers saw this cost as a barrier to home ownership, up from 44% in June 2018.
The last time this number of consumers rated monthly repayments as a barrier was back in June 2014 (49%), the BSA noted.
High house prices in some regions are still a significant issue with 36% of consumers still believing that prices will rise in the next 12 months while 22% expect a fall.
Brexit and Bank Rate
BSA head of mortgage and housing policy Paul Broadhead said consumer negativity on home purchase was borne out by a subdued mortgage market with remortgaging the only area of growth.
“This has been in part driven by borrowers looking to fix their mortgage rates as Bank Rate rises,” he said.
“Now there is evidence that fixed rate periods are starting to rise with borrowers looking to secure their repayments before the Bank Rate rises again.”
“Uncertainty about Brexit – deal or no deal – is dampening the volume of property purchases, with many of those who can delay doing so,” he added.