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A new mortgage plan?

20th November 2008 | back to article listings BACK    print this article PRINT

Next week's pre-budget report by the government will be a subject of interest to people all over the country, as chancellor Alistair Darling and his Treasury team seek to come up with plans to help Britain through the recession and ease the credit crunch.

For property investors, there may be much to hope for in terms of measures that may generally help the economy weather the storm, since a stronger economy should mean a more robust property market. Therefore moves to lower tax, boost employment and reduce pressure on businesses may all help.

To this end, prime minister Gordon Brown has promised that there will be action to make the banks lend more to businesses. But there may be serious pressure - not just from political opponents either - to not just do this but also to oblige the lenders to increase their mortgage supply, something the slow fall in interbank lending rates is holding back.

Such thoughts were given emphasis today by the Council of Mortgage Lenders (CML). On the face of it, October's mortgage lending figures were good news, with a total of £18.7 billion being lent, a rise of close to seven per cent on September's 17.5 per cent. But this was still down by 44 per cent on October 2007.

Focusing on the latter figure, the CML chose to see this as a glass half empty. Director General Michael Coogan said the issue of the scarcity of mortgage finance still remains and looks set to do so despite the recent interest rate cuts.

So while some may see the October figures as possibly the start of a recovery in the market, the CML has remained concerned that the situation is not as healthy as it could be, given the possibilities it has seen for effective government action that could bring a stronger recovery.

As a result, Mr Coogan focused on the pre-budget statement and the Crosby report as crucial in the fortunes of the market in the months ahead. He proposed: "The government should therefore publish the delayed Crosby review as part of the forthcoming pre-Budget report and announce concrete steps that will enable and encourage firms to increase mortgage loans."

So while Gordon Brown is talking about how the statement will set out ways to bolster businesses, the issue of mortgage lending is not being allowed to lie just because of one month's improvement. It may be, of course, that Mr Brown and chancellor Alistair Darling already have plans to help raise mortgage lending levels. Either way, if measures to this effect are part of the plans announced next week, the result could be to boost confidence and ensure that this month's improvement in lending levels was not a one-off.

This is a press release by Assetz also available at http://press.assetz.co.uk/articles/4498.html. Alternatively, please see our full press release archive.

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