The Conservatives' pledge to extend the right to buy policy to tenants of housing associations could threaten the latter's appetite to borrow in the markets, according to the sector's trade body – undermining one of UK insurers' major investment initiatives.

Under the policy - announced on Tuesday in the Conservatives' election manifesto - 1.3 million tenants in affordable housing developments run by the 12,000 housing associations in England will be eligible to buy their homes at steep discounts to market rates. The discounts would be capped at just over £100,000.