Post-financial crisis banking reforms have made it harder for aspiring homeowners to access mortgages and get onto the property ladder, according to a new report from the Institute of Economic Affairs (IEA), which argues that tighter lending rules have constrained borrowing and slowed the UK’s economic recovery.

The report claims stricter capital and lending requirements introduced after the 2008 financial crisis have reduced banks’ willingness to lend, particularly in a market where households and businesses rely heavily on traditional bank finance. The IEA argues that increasing access to mortgage lending and business finance will be critical if the UK is to improve home ownership and stimulate economic growth.

The paper suggests that while the reforms strengthened the resilience of the banking system, they also contributed to a more restrictive lending environment that has made it more difficult for buyers to secure mortgages and for businesses to access finance.

Tyler Goodspeed, economist and author of the briefing, said: “For fifteen years, British policymakers have told themselves that a slow recovery was simply the price of a deep recession. It isn’t. History shows deep recessions are usually followed by strong rebounds. Britain’s experience after 2009 departed from this pattern because regulators, with the best of intentions, made it structurally harder for banks to lend to British businesses. That was a choice, and it is still being made today.”

Lord Hannan, director general of the Institute of Economic Affairs, commented: “Britain has a growth gap, and it isn’t because it spent too little. Britain has underlying structural problems of its own creation that undermines its ability to grow and create wealth and prosperity, including banking regulation. We made it too hard for banks to lend to businesses.

“Every recession in our history teaches the same lesson: the deeper the fall, the stronger the bounce. Ours didn’t bounce, because regulators – with entirely good intentions – built a system that starves small firms of credit while rewarding banks for buying gilts instead. If we want the growth we were on course for in 2007, we need to think again about capital regulation.”