Local Authorities Looking To Help Those With Mortgage Loan Problems
Since the beginning of the credit crunch last year, there has been an ever increasing number of people struggling to keep up with their mortgages and home loans and the council of mortgage lenders (CML) predict that there will be a huge increase in arrears on mortgage loans and that repossessions are likely to reach 45,000 by the end of this year, due to the current economic climate.
But it may now soon be possible for local councils to offer mortgage loans to those facing financial difficulties in their local areas. The New Local Government Network (NLGN) is attempting to raise support from local authorities in order that they may lobby the Government to allow local councils to provide home loans and has already obtained signatures on a letter to the Government from a number of local authorities and has a large amount of interest from other councils, who are expected to join the campaign.
This idea is nothing new, as local authorities have previously offered loans for house purchase to local people, from the late fifties, up until the eighties, when a large number of new lenders increased the competition in the mortgage loan market. The Government has already injected £50 billion into the banking system to try and ease the situation and the NLGN are requesting that £2 billion is allocated to local councils to run the scheme, which it feels, would bring a degree of stability to the housing market in their local area.
The scheme has not yet been approved and is still at the proposal and support gathering stage, but the NLGN intends to approach the Government with its plans in the autumn, once Parliament resumes. If they do support the proposals, it is likely that the scheme could be established in a short period of time. James Hulme, from the NLGN said “It would take no time at all to do it. It just needs to be agreed with the Treasury as well as how much they can allocate to it.”
