Approval For Government Rescue Plan On Homeowner Loans
We reported on Monday (19th Jan) this week about the new plans from the Government to introduce a further financial rescue plan for banks and building societies in order to encourage them to start providing a range of more competitively priced homeowner loan products and ease their lending criteria, to give the much needed boost to the struggling UK housing market.
The scheme will introduce a system of asset backed securities from the Treasury to buy up lenders’ bad credit loan debts and free up liquidity for banks, in line with the recommendations made in the report by Sir James Crosby last November, enabling them to offer loans to customers once more.
The news has been welcomed by the Royal Institute of Chartered Surveyors (RICS), who have been saying for some time now that the main thing holding back the housing market in the UK is the lack of funding through suitable homeowner loan availability. RICS claim that the scheme will encourage inter bank lending on the wholesale money markets once more and free up liquidity for banks and building societies to be able to offer much needed loans to potential home buyers.
A recent survey, which was conducted by RICS on the housing market, revealed that the lack of availability of homeowner loans was the main thing holding back the housing market. The survey showed that enquiries to estate agents from new buyers are currently at the highest level they have been since August 2006 and interest is still increasing.
However, at the same time as this, the number of new homeowner loans which are being approved is at an all time low, mainly due to a lack of secured loan funding from banks and building societies.
