http://www.telegraph.co.uk/finance/p...mortgages.html
Gordon Brown to bar 100pc mortgages
Gordon Brown is to prevent banks and building societies offering 100 per cent mortgages in an attempt to usher in a new era of "responsible lending".
The Prime Minister and Alistair Darling, the Chancellor, will make the move in a tacit admission that the Government did not do enough to stem the wild lending policies that played a major role in creating the credit crisis.
Although critics will claim that the Government is acting too late – few if any 100 per cent mortgages are available to home buyers now – ministers insist that action must be taken to stave off a future crisis.
"This will be a symbol of a new era of responsible lending," a senior government source told The Sunday Telegraph.
Mr Brown, who visits Berlin on Sunday for an economic summit with fellow European leaders, and Mr Darling have asked the Financial Services Authority (FSA) to review the rules that allow lenders to offer loans worth the entire value of a property – or even more.
However, sources made it clear that the FSA was effectively being ordered to recommend a ban, which ministers would implement immediately. It would apply only to new loans.
Mr Brown said: “We have got to get the balance right between serving home owners better and encouraging responsibility in the housing market. Britain needs to lead the world in reforming and restructuring our banking system.”
Ministers also want to step up the drive to get banks offering "traditional" home loans worth between 75 and 95 per cent of a property's value – a market that has been badly hit by the recession.
To this end, they will make banks agree to increase lending as a condition of participating in the taxpayer bail-out of "toxic" assets, the full details of which are expected to be agreed this week.
The "asset protection scheme" will see the taxpayer underwrite bad assets under an open-ended agreement that will potentially cost hundreds of billions of pounds.
A Treasury source said: "Clearly there will be some insurance provided for some assets – the exact figure to be agreed and decided. Our priority is to get some conditions attached to that in the form of additional lending. If you can free up capital it should make it easier to lend."
Royal Bank of Scotland (RBS), which is almost 70 per cent-owned by the taxpayer following its £20 billion autumn rescue, is planning to place about £250 billion of toxic assets in the scheme.
Meanwhile, in an interview with The Sunday Telegraph, Ken Clarke, the shadow business secretary, calls on the Government to go further still in its efforts to boost lending – this time in the car industry.
He wants the finance arms of car companies to be treated in the same way as banks, giving them extra, government-backed security for loans.
His comments come after the Unite union claimed that an unnamed British car plant was on the brink of closure unless the Government bailed it out. Ministers played down the claims but Unite said bosses from the car company involved would be meeting ministers tomorrow.
It was also confirmed yesterday that Mr Brown will visit President Barack Obama in Washington next week. It is thought that he will be the first EU leader to do so.
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"Ministers also want to step up the drive to get banks offering "traditional" home loans worth between 75 and 95 per cent of a property's value – a market that has been badly hit by the recession."
Surely he should be banning any mortgage over 75% and more than three times salary?
Gordon Brown to bar 100pc mortgages
Gordon Brown is to prevent banks and building societies offering 100 per cent mortgages in an attempt to usher in a new era of "responsible lending".
The Prime Minister and Alistair Darling, the Chancellor, will make the move in a tacit admission that the Government did not do enough to stem the wild lending policies that played a major role in creating the credit crisis.
Although critics will claim that the Government is acting too late – few if any 100 per cent mortgages are available to home buyers now – ministers insist that action must be taken to stave off a future crisis.
"This will be a symbol of a new era of responsible lending," a senior government source told The Sunday Telegraph.
Mr Brown, who visits Berlin on Sunday for an economic summit with fellow European leaders, and Mr Darling have asked the Financial Services Authority (FSA) to review the rules that allow lenders to offer loans worth the entire value of a property – or even more.
However, sources made it clear that the FSA was effectively being ordered to recommend a ban, which ministers would implement immediately. It would apply only to new loans.
Mr Brown said: “We have got to get the balance right between serving home owners better and encouraging responsibility in the housing market. Britain needs to lead the world in reforming and restructuring our banking system.”
Ministers also want to step up the drive to get banks offering "traditional" home loans worth between 75 and 95 per cent of a property's value – a market that has been badly hit by the recession.
To this end, they will make banks agree to increase lending as a condition of participating in the taxpayer bail-out of "toxic" assets, the full details of which are expected to be agreed this week.
The "asset protection scheme" will see the taxpayer underwrite bad assets under an open-ended agreement that will potentially cost hundreds of billions of pounds.
A Treasury source said: "Clearly there will be some insurance provided for some assets – the exact figure to be agreed and decided. Our priority is to get some conditions attached to that in the form of additional lending. If you can free up capital it should make it easier to lend."
Royal Bank of Scotland (RBS), which is almost 70 per cent-owned by the taxpayer following its £20 billion autumn rescue, is planning to place about £250 billion of toxic assets in the scheme.
Meanwhile, in an interview with The Sunday Telegraph, Ken Clarke, the shadow business secretary, calls on the Government to go further still in its efforts to boost lending – this time in the car industry.
He wants the finance arms of car companies to be treated in the same way as banks, giving them extra, government-backed security for loans.
His comments come after the Unite union claimed that an unnamed British car plant was on the brink of closure unless the Government bailed it out. Ministers played down the claims but Unite said bosses from the car company involved would be meeting ministers tomorrow.
It was also confirmed yesterday that Mr Brown will visit President Barack Obama in Washington next week. It is thought that he will be the first EU leader to do so.
===========================
"Ministers also want to step up the drive to get banks offering "traditional" home loans worth between 75 and 95 per cent of a property's value – a market that has been badly hit by the recession."
Surely he should be banning any mortgage over 75% and more than three times salary?
Comment