Fannie Mae scheme could make housing affordable

Our young professionals are struggling to get onto the property ladder. House prices are high, which is a consequence of limited supply and high demand.

Now I don't believe it is for a government to determine the level of prices, but I do believe that it has a role in making affordable housing available to those who need it.

Quite rightly, our government provides social housing for those in dire need but little is done to help those who are trying so hard to improve their lot.

Yet the answer is very simple and has been used elsewhere to great effect.

So let's look at the two sides of the equation.

First, supply. We are told that developers have permissions but they don't have the capital to put at risk in order that they can actually build developments.

Banks are not interested as they are still reeling from the banking crisis. The GHA has a few projects, but far too little to make a difference.

Now to demand. I am sickened by the estate agents' descriptions of houses for sale at the lower end as 'first-time buyer or investment' properties.

The latter tells us who has the money to buy the properties which come to market: buy-to-let investors. Meanwhile those wanting to buy their first homes have to save huge deposits and at the same time pay high rents, often to the 'buy-to-let' investors.

I say that is simply wrong.

They will leave our island in frustration and we need this generation to provide the tax to stave off our black hole.

There is a simple solution which meets the needs of both investors and borrowers. What the States needs to do is to set up a local version of the original Fannie Mae. For those not familiar with it, this was a government agency which matched borrowers with investors. Put in simple terms, house buyers take out a mortgage and investors buy that mortgage. Mortgages are pooled and the government's role is to collect payments, make pools of the mortgages and sell them to investors as savings bonds.

At no point does government have to use its money other than as a guarantor.

In the worst-case scenario, government might end up owning the property. I think that risk is acceptable as the properties would effectively become social housing but of course could be sold on.

Why would this help buyers? Because government could offer 100% mortgages based on ability to repay. It is the deposit-saving which is the bottleneck today.

We have the expertise to make this happen. It is nothing new. Fannie Mae was set up in the Great Depression for very similar reasons: to help people to buy a home.

Why wouldn't we use the same method today?

MARTYN HENLEY-ROUSSEL.