Measures for housing market planned

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The Government will try to put its recent problems behind it this week when it unveils a package of measures to help struggling homeowners and first-time buyers.
It is expected to launch a number of initiatives on Tuesday ranging from improved support for people facing repossession to new savings plans and shared equity schemes for those trying to get on to the property ladder.
The announcement, which follows rumours of tensions between Number 10 and the Treasury, will be made as a joint statement from Prime Minister Gordon Brown, Chancellor Alistair Darling and Secretary of State for Community and Local Government Hazel Blears.
Measures to help existing homeowners who are struggling with repossession are expected to be at the heart of the package.
The Government is understood to have been working with trade body the Council of Mortgage Lenders to ensure that repossession is only ever a last resort once everything else has failed, and to make sure that people struggling to pay their mortgage are treated fairly.
But it is also expected to announce moves enabling housing associations to purchase unsold homes on the open market in a bid to boost the social housing stock, as well as an expansion of the Government's shared equity schemes, under which buyers purchase only an affordable percentage of their home.
Other expected measures include an initiative to help people trying to get on to the property ladder save for a deposit, such as a doubling of the tax-free cash ISA allowance to £7,200 for first-time buyers, or creating a new regular saving scheme with similar tax benefits for this group.
It is currently critical for buyers to have a large deposit as lenders reduce the loan to value ratios they are prepared to advance as a result of falling house prices and a shortage of funds due to the credit crunch.
There are now just two 100% mortgage deals available, while the number of 95% loans has been cut drastically, with most lenders demanding borrowers put down a deposit of at least 10%.
This week's statement is also expected to provide some clarity on the Government's intentions for stamp duty.

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Re: Measures for housing market planned

Councils want power to offer competitive mortgages

is quite interesting as well.

Council chiefs have called for extra powers to allow them to offer competitive mortgages in an attempt to rescue the housing market.
In a letter published in today's Times, they argue that the public sector should be able to help first-time buyers and those unable to secure a home loan. Critics believe that the move could lead to higher council tax if borrowers defaulted.
The councillors want to borrow an extra £2 billion from the public works loans board, a Treasury agency that allocates funding for capital public sector projects. They are pressing for the idea to be discussed at a Cabinet meeting on September 7, when the Prime Minister is expected to draw up the Government's solution to the housing crisis.
Caroline Flint, the Housing Minister, is said to be sympathetic to it but Treasury ministers are less so.
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Figures published yesterday by the Council of Mortgage Lenders show that the lending rate fell by a third in the year to July. The council also said that it expected the mortgage market to shrink by 20 per cent this year.
Chris Leslie, director of the New Local Government Network and a signatory to the letter, said that councils wanted to save people from being kicked out of their homes. He said that councils could raise millions of pounds over the next decade by offering cheaper mortgages than the private sector.
With public borrowing increasing further, Whitehall officials believe that the risk to council taxpayers and the Government would be too high.
One source told The Times that those who applied for town hall mortgages were likely to be those most at risk of defaulting. He said that it was unlikely that the Government would want to take on such a risk by approving further borrowing.
Liverpool City Council is set to introduce a mortgage scheme shared with a private lender and has stated that all those offered mortages will be creditworthy. “We are talking about people who were offered a mortgage a few months ago, when the lenders were offering 95 per cent mortages, but are unable to do so now that deposits of 15 per cent are required,” it said.
Solutions to the mortgage crisis are proving problematic for the Government. Last week Mervyn King, the Governor of the Bank of England, criticised two plans that the Treasury was considering.
Councils are allowed to offer mortgages but regulations introduced in the Eighties ties them to an uncompetitive interest rate and prevents them from undercutting private sector rivals. “In 1980, 600,000 mortgages with homeowners were held by local authorities,” the councillors say in the letter. “Since then, the banking industry has almost universally taken on this role.
“The Government should recognise that local authorities are well placed to judiciously take a share of mortgage business.”
The Council of Mortgage Lenders welcomed the plan but said that councils would have to be subject to Financial Services Authority rules. The British Banking Association suggested that local authorities could end up being stung by the tough mortgage market conditions.
Andy McQueen, managing director of Nationwide's specialist lending division, said: “It would be good news for customers if it got off the ground but it would not be done in a couple of months.”
The councils would need proper resources and experienced staff to make the scheme work, he said.