Alistair Darling pledges to revive ailing mortgage market

Permalink: Alistair Darling pledges to revive ailing mortgage market
by Kay Murchie

Chancellor Alistair Darling has pledged to revive the ailing home loan market after concerns that UK is heading for a housing slump.

Mr Darling has announced he will consult on measures to tempt investors back to the credit markets which provide funding for banks’ loans to homeowners.

Since the fallout from the sub-prime mortgage crisis in the US, lenders have tightened their lending practices.

The drying up of the wholesale markets is making it difficult for lenders to offer competitive rates to borrowers.

Consequently, the Government has outlined plans to launch a new ratings system to try to reassure investors that the securities on offer from UK lenders are good quality. This could bypass the ratings agencies, which are under attack for failing to anticipate the collapse of the sub-prime markets.

In a speech, Mr Darling said to increase transparency and boost investor confidence, the Government will consult on a new ‘gold standard’ for covered bonds and mortgage-backed securities, which will help not just the housing market but wider economic growth in these uncertain times.

Mr Darling has also tried to put homeowners’ minds at ease by saying the UK is not heading for a housing crash, in spite of house price falls recently.

The Chancellor added that the conditions in the market differ to those during the housing market crash in the early 1990s, with low unemployment and low interest rates.