Assetz® News » HOME | RSS Feed FEED | LIST ALL ARTICLES | ASSETZ HOMEPAGE
Investment Property News from Assetz

Assetz® Property News Service

Credit where credit's due

16th December 2008 | back to article listings BACK    print this article PRINT

In the wake of the collapse of Lehmann Brothers and the apparent imminence of financial meltdown, the government and its counterparts across the globe launched a series of initiatives to prop up the ailing system and seek to not only keep lenders afloat, but also get them lending again.

The importance of such an increase in credit flow was emphasised recently by Bank of England governor Mervyn King, who told MPs on the Treasury select committee that it was the "most pressing" policy priority. Failure to increase lending would lead to a much deeper recession, he warned.

Speaking at the recent Council of Mortgage Lenders conference, director general Michael Coogan questioned whether measures taken by the government to prop up the banks would lead to a major recovery in mortgage and other lending. He stated that the 12 per cent cost to the newly recapitalised banks of borrowing from the Treasury and the cost of using the special liquidity scheme meant that it is "not surprising that banks focus on rebuilding the strength of their businesses rather than taking on additional risks by new lending".

With Mr Coogan predicting that even matching 2008 mortgage lending levels - never mind the 2007 figure the government wants - in 2009 will be an achievement, investors may have found little to encourage them in the speech.

However, the situation may now have changed. Having examined the workings of the arrangements of the government's credit guarantee scheme, chancellor Alistair Darling has instigated some changes. Today these were announced by the Treasury.

In particular, the cost of the fees lenders must pay to the government are to come down. The Treasury stated that this will bring Britain into line with the similar measures implemented by governments overseas. Secondly, the period of time over which the scheme will operate is to be extended from three years to five, a move intended to ease the transition lenders make from guaranteed lending to operating in the open market again.

Declaring its intention that this should crack the lending nut, the Treasury declared: "The government will, through the lending panel, ensure that this is reflected in the terms and availability of credit to households and businesses."

These moves have gained a welcome from Michael Coogan. Referring to the demands made on lenders by the government as "contradictory", he remarked: "We welcome the chancellor's acknowledgement that there is still more that the government can do to help try to facilitate more conducive conditions for lending."

Such measures may indeed not be the last the government announces, with possible further policies announced in the 2009 Budget. But for investors in property keen on borrowing to fund their acquisitions, the situation may be about to become much more favourable.

This is a press release by Assetz also available at http://press.assetz.co.uk/articles/4545.html. Alternatively, please see our full press release archive.

Assetz® is a UK and International Property Investment Specialist. Please visit our property sites shown below.

Assetz for Investors UK Assetz Hotels Assetz Homes Assetz International Assetz France Assetz Spain Assetz Cyprus Assetz Germany Assetz Portugal Assetz Ski Assetz Cape Verde Assetz USA Assetz Finance Assetz Fund Management

Accessing the news service

You can view all of the Assetz® UK, International and UK Property Investment Articles and News here.

We also provide an RSS Feed Feed of the news service, or you can view all articles. Click here to view more information on RSS readers and how they make reading online news more convenient.

eXTReMe Tracker