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MPs say Govt stimulus not helping lending

MPs have attacked the Government for failing to do enough to helping the housing and mortgage markets.

A new report by the communities and local government committee found that the measures taken by the Government in the Budget have not been enough to stimulate house building and market activity.

The report identifies two imperatives for Government action. First, it stated that the Government must take steps in order to retain capacity in the house-building sector and to avoid storing up problems in the future. Secondly, the report states that the Government must work to ensure house builders can sell their completed homes.

Home Builders Federation director of economic affairs, John Stewart says in the report: “It is very simple: if you cannot sell a home, you do not build it. House builders cannot afford to just endlessly build up stocks of unsold property.”

In addition, the report stated that the Treasury’s Asset-backed Guarantee Scheme is not providing the necessary stimulus to boost mortgage lending in the housing market.

Intermediary Mortgage Lenders’ Association deputy chairman, John Heron says in the report: “The key dysfunction from the mortgage lender’s viewpoint at present in the economy, and in mortgage lending and indeed in housing generally, is the absence of funding and the absence of operating market mechanisms to ensure a flow of funds to mortgage lenders.

“Whilst we were impressed with the Asset-backed Guarantee Scheme that was announced and subsequently introduced, it is a great shame that it falls short of its objectives.”

At this afternoon’s Treasury question time, Shadow Chancellor George Osborne called on the Chancellor Alistair Darling to review and reassess the scheme, which he says is not working.

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