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Pre Budget housing market changes may have profound effect on economy

Robin King, movewithus founding director, believes that one aspect of the Pre Budget report doesn’t seem to be getting as much media attention as it deserves - the Government’s proposal for a temporary guarantee for securities backed by new mortgages.

King said: "If this gets the go ahead, it will be a further indication of liquidity returning to the market, which will have a more profound effect on the recovery of the economy than most of Alistair Darling’s other spending pledges. At the moment, building societies are providing the majority of new mortgages to borrowers who are unlikely to default on their repayments. The spread of interest rates is extremely favourable for lenders at the moment and banks are missing out."

King continued: "With a guarantee for securities backed by new mortgages, surely negative risk managers in banks will realise that they have the opportunity to preside over a regeneration of the housing market where responsible mortgages fund real homeowners and their ‘eclectic’ lending practices become a thing of the past. The Government’s focus now has to be on first time buyers, who need convincing that it’s the right time to re-enter the market.”

Source

http://www.movewithus.co.uk/00,news,56951,468,00.htm (launches a new window)

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