The Council of Mortgage Lenders have put forward a scheme to help ease the shortage of mortgage funds for new homebuyers. The CML hope that the Bank of England will be willing to guarantee a market for new mortgages. It would encourage people to invest in these products creating more funds for mortgages.
With no sign of the credit crunch easing, some are concerned that activity in the housing market has slumped to alarmingly low levels. The Royal Institution of Chartered Surveyors have recently published a report stating falls in house prices and the lowest levels of housing activity since records began in 1978. The RICS also warn that house prices could undershoot as people overeact to negative news.
Analysis
The Bank of England’s previous £50bn scheme to secure mortgage lending hasn’t solved the problem in the mortgage industry. This new scheme might help because it will extend the scheme to first time buyers as well. It is worth trying to act, rather than hoping that the problems will end. With the paralysis in the housing market, there is a chance house prices could undershoot, especially given:
1 comment so far ↓
Absolutely, first time buyers need to be able to get back into the market and property ladder. I have a 4 bed detached for sale and it’s not budging 1) it seems due to stamp duty and 2) 1st time buyers are not buying the smaller properties, hence all the chain is effected. Help people to get morgages, banks need to lend and hopefully housing will stabilise.
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