UNISON yesterday called on the government to build more council houses as First Direct became the first major bank to stop lending to house buyers.
A UNISON spokeswoman told News Line: ‘Owning their own home is beyond the reach of most public sector workers.
‘The government needs to urgently address the problem of the supply of more affordable rented accommodation by increasing the stock of council housing available.’
UNISON was responding to news that First Direct, owned by banking giant HSBC, has stopped offering mortgages to new customers.
First Direct maintained the decision was taken following a leap in demand, after other mortgage providers either raised interest rates or tightened their rules following the Northern Rock collapse.
‘Rather than increase interest rates dramatically to discourage new applications, we’ve decided to withdraw temporarily from offering mortgages to non-customers until we’ve cleared the backlog,’ said First Direct chief executive Chris Pilling.
First Direct denied it had a problem raising funds.
It is the first bank to withdraw its entire range of mortgages to new applicants, although the Bath and Earl Shilton building societies took the same step last month.
It is now feared that first-time buyers will soon be required to put down a ten per cent deposit to secure a mortgage, meaning they would need £25,000 to get on the housing ladder in London.
The latest Bank of England figures show the number of new mortgages approved for house purchases fell to just 73,000 in February – the lowest level for 13 years – as the rapid contraction of mortgage lending drives away first-time home buyers.
The Bank’s figures show that remortgaging also dipped in February, with the number of new loans approved for people who are staying put, but moving their mortgage deals to new lenders, fell to 111,000 from 118,000 in January.
Despite a rebellion by 30 Labour MPs, the government on Monday defeated an amendment to the Housing and Regeneration Bill that called for more money to build and repair council homes.
Speaking for the amendment, Hayes and Harlington MP John McDonnell said: ‘There is a crisis of housing and homelessness in my constituency such as we have not seen since just after the second world war.
‘I find it emotionally difficult to cope with my surgery each week because of the number of people who turn up with their families, including their children, whom I can do nothing to assist because there is not an adequate supply of housing.
‘About three quarters of those homeless families have children.
‘I looked up the recent government figures, and 112,000 children are now being brought up in homeless households, some 700 of whom are living in bed-and-breakfast accommodation.
‘There are 700 children living in bed and breakfasts 11 years after the election of a Labour Government.’
