The 2020 review of the measures focused on understanding the impact of the COVID-19 shock on the housing and mortgage markets as relevant for the objectives of the measures. The review drew on extensive analysis and stakeholder engagement on the effectiveness of the measures.
The mortgage measures have been effective in strengthening bank and borrower resilience. The benefits of that resilience are most evident in times of stress.
While the initial effects of COVID-19-related disruption on the housing market have eased, the implications of the shock continue to feed into housing demand, supply, market activity and prices. Housing supply, in particular, is likely to remain significantly below pre-pandemic levels until 2022. In contrast, the recovery in the mortgage market has been faster than originally expected, pointing to strength in underlying demand for housing.
Looser credit standards, such as lower minimum deposit requirements or a higher LTI requirement, would not necessarily improve access to, or the affordability of mortgage-financed home ownership.
With the supply of housing generally being below demand, looser credit standards would increase the demand for housing, while the supply of housing would not be able to increase at the same pace. This would likely lead to an increase in property prices and more households with high levels of debt.