A coherent housing policy needed

In his excellent memoir, Stress Test, Timothy Geithner, the former Secretary of the US Treasury, had a lot to say about housing that resonates strongly in an Irish context, writes Jim Power.

His overall perspective on the residential housing market is that “housing was an impossibly complex issue that didn’t lend itself to simple solutions, and the limitations of our housing programs were a lot easier to identify than they were to fix”. He concluded that eventually “Congress will have to make some tough choices about the mortgage market — not just to reduce the Government’s dominant role, but how to balance the trade-off between safety and accessibility”.

He believes mortgage lenders should require substantial down payments from borrowers, which would make it harder for some families to become home-owners, but would help reduce the risks of the terrible collapse that occurred during the crisis, and he believes higher down payments would act as a shock absorber in the system. However, he was also sensible enough to recognise such change would be a challenge because “powerful real estate and financial interests tend to align with progressive consumer advocates to fight measures that would make mortgage lending more conservative and mortgage credit less affordable”.