In politics and economics, it’s often said that those who forget history are doomed to repeat it.
That warning feels especially relevant now as Chancellor Rachel Reeves rolls out sweeping changes to mortgage rules that some say look eerily similar to the risky policies that helped bring about financial disasters in the past.
Her new plan to loosen lending restrictions may sound like a gift to aspiring homeowners — especially younger buyers.
But to those who lived through the housing crashes of the 1990s and 2008, it’s raising serious red flags.
From the Banking Crisis to the Cabinet Office
Rachel Reeves isn’t just any politician. She once worked at Halifax Bank of Scotland (HBOS), which infamously collapsed during the 2008 financial crisis after pushing too hard and too fast to dominate the mortgage market.
Back then, HBOS had ditched responsible lending and paid the price — eventually needing a government bailout and a hasty rescue merger with Lloyds-TSB.
You’d think Reeves would remember the dangers of unchecked lending.
But critics are saying she’s walking the country right back into the fire.
The Mansion House Reveal and the Big Mortgage Shake-Up
Speaking at the iconic Mansion House in London, Reeves unveiled her latest vision for the housing market.
At the heart of her plan: a relaxation of mortgage rules that would allow borrowers to take out loans up to six times their salary — up from the current 4.5 limit.
In addition, minimum income thresholds would be lowered, with solo applicants able to qualify with a salary as low as £30,000, and joint applicants at just £50,000.
The goal? Help more people — especially younger generations — get onto the housing ladder. But at what cost?
A Flashback to Financial Catastrophe
Veteran observers haven’t forgotten what happened when lending standards were previously thrown out the window.
In the early 90s, soaring interest rates led to a wave of negative equity, where homes were worth less than the mortgages attached to them.
Many people gave up — literally posting their keys back to the bank.
And then there’s the Northern Rock collapse of 2007, when the lender began offering 100%+ mortgages without enough scrutiny.
Confidence crumbled, a bank run ensued, and the UK was left grappling with images that made the economy look like it belonged to a “banana republic.”
That disaster is still fresh in many people’s minds.
Yet Reeves’ proposals, critics warn, seem dangerously similar.
Who Benefits — and Who Gets Left Behind?
Supporters of the plan say the “Helping Hand” mortgage scheme, to be managed by Nationwide, will offer real hope to lower-income buyers in overlooked parts of the country.
But in high-growth cities like London and Cambridge, where property prices are driven by high salaries and tech sector demand, it may barely make a dent.
Meanwhile, looser affordability checks could open the door to riskier lending — and a potential spike in defaults, which would only put future lending capacity under pressure.
The Bigger Picture: A Backdoor Strategy to Spark Growth?
Since stepping into the Chancellor’s office, Reeves has made it clear that she wants to jumpstart the economy.
She’s voiced frustration with regulations imposed by the Financial Conduct Authority and the Bank of England, arguing they hold back growth.
But others argue the real drag on prosperity lies elsewhere — namely, her £40 billion tax-hiking budget, which includes steep increases to employer National Insurance contributions.
Critics say she’s now trying to stimulate the economy through a backdoor — the housing market — because traditional growth levers aren’t working.
Echoes of Boom and Bust Economics
There’s no doubt the dream of home ownership is worth protecting.
But rushing into aggressive lending schemes without proper safeguards has proven to be a dangerous path in the past.
Rather than solving the problem of sluggish growth, Reeves may simply be setting the stage for another financial bust — one that could hurt the very people she’s trying to help.
In the end, critics warn that this isn’t just bold policy — it’s playing with fire.