Chancellor Alistair Darling has vowed to help the recovery of wholesale mortgage markets which he says are essential to stabilising the housing sector.
In a speech to manufacturing group the EEF last week, Darling said that today’s housing market is in a much better shape than before the early 1990s’ crash. He added that the UK market is in a much stronger position than the US.
Darling said the easing of tight credit conditions in the secondary mortgage markets is essential. He said the Government will consult on a new “gold standard” for covered bonds and mortgage-backed securities which “would help not just the housing market but also wider economic growth”. An announcement will be made in next month’s Budget.
During the speech, Darling again pushed long-term fixed-rate mortgages, claiming that “for many households, particularly those on low incomes, fixing the level of mortgage repayments for several years makes real sense and it can also contribute to wider macroeconomic stability”.
He insisted that the UK is not set for a housing crash, explaining that while many US mortgages were sold at hugely discounted rates, leaving people unable to meet repayments when rates increased, UK lenders have been more responsible in taking account of an individual’s ability to pay.
John Charcol senior technical manager Ray Boulger says it is good news that the Government has publicly recognised that there is a problem in financing.
He says: “My concern is that the Government will spend too long consulting on this. There needs to be a consultation but it needs to be on a short timescale. The Government needs to react quickly.”