Susan Smith, Professor of Geography and a Director of the Institute of Advanced Study at Durham University, believes the time is right for creating a public-private partnership to make effective use of housing derivatives.
"Using housing derivatives (based on house price indexes), home buyers could trade lower housing outlays against future gains, first time buyers could buy in stages, and owners could recoup part of their investment in times of need.
Such instruments could be used to:
- Reduce the costs of entry to the housing market, enabling first-time buyers to take out smaller loans at a low rate of interest;
- Insure home equity against slumping prices;
- Allow people in arrears to swap future price appreciation for a lump sum to reduce their loan (and perhaps stave off repossession);
- Help home owners balance their investments.
- Provide renters with an opportunity to buy into future house price appreciation if they want to.
Professor Smith said: “In this new system a family in financial trouble could remain in their home with less cost and less distress than at present.”"
Source: 24Dash.com
