David Prosser: Housing is affordable – once you've bought it

Outlook On yesterday's warning from the National Housing Federation that home ownership rates are going to fall back to the levels of the 1980s, it is worth pointing out again that the affordability of housing has not been so good for many years.

The Bank of England said yesterday that the average interest rate now being paid on all outstanding mortgages is just 3.42 per cent, the lowest figure recorded since the Bank began monitoring this statistic in 1999. And Halifax, Britain's biggest mortgage lender, said last week that Britons currently spend a smaller proportion of their disposable incomes on mortgage repayments than at any time for a generation. The cost of renting a home is now higher than buying one, it added.

So what is the NHF on about? Well, all of the above is true once people get on the housing ladder. What prevents them from doing so is the large deposits required – 100 per cent mortgages have gone, while 95 per cent loan-to-value products remain in short supply. There are more 90 per cent products available, but that requires the average first-time buyer to find a deposit of around £13,500.

The NHF is right to say we need to build more houses in this country – all the demographics point that way. The short-term challenge, however, is to find a way to help people get over the impossibly high hurdle that the need for these very large deposits represents.