With the government planning to grow the shared ownership market by 70% in the next five years more lenders are needed to help it flourish, a Council of Mortgage Lenders paper has recommended.
The CML research paper ‘Shared ownership: Ugly sister or Cinderella?’ said more lender adoption is needed to keep pace with growing demand, especially on larger sites and where buyers have limited deposits.
Currently mortgages support three quarters of shared ownership purchases, but with around 15-20 firms currently lending on shared ownership the majority of lending is concentrated with a few lenders.
The CML felt a number of lenders are put off as they see shared ownership as risky.
It therefore told them to examine actual evidence on risks of arrears and default rather than relying on potentially outdated perceptions.
A number of lenders are also said to be put off by negativity about the tenure from the Prudential Regulation Authority.
Paul Smee (pictured), CML director general, said: “This new independent research paints a positive picture of the current shared ownership market, and points up a number of productive recommendations for everyone involved to help its further development.
“We hope these will chime with the forthcoming government white paper on housing, and we look forward to helping our members towards an operating environment that is favourable to shared ownership lending as a “fourth tenure” for the UK.”