Finance Bosses Meet To Discuss New Loan Availability
Over the past few months there have been an increasing number of calls from financial experts for the Government to offer financial assistance to banks and building societies in order for them to be able to offer realistic mortgages and secured loans to potential borrowers, in the hope that this could help to revitalise the struggling housing market in the UK.
The main recommendation for Government intervention came from the Crosby report, which was eventually published in November last year. One of the major points of the report was that the Government should offer bonds to struggling lenders which use secured loans as security for the investment.
Over last weekend, a number of important figures from the banking sector held a meeting with the Prime Minister at his country home, Chequers, to discuss the various options to help restore liquidity to banks and building societies and enable them to start offering secured loans once more at affordable prices and better loan to value ratios.
Whilst all seem to be in agreement about the use of Government bonds, the main concern is over how much these are likely to cost lenders. If they cost too much, banks will not be able to afford to use them, but if the price is too low lenders will make too much profit, at the expense of the UK tax payer.
One of the most important factors of the bonds is that the funds will have to be used for new secured loans only and not for remortgage cases, in order to introduce completely new borrowing to the market.
Many experts believe that the only thing which is now holding back the housing market is the lack of availability of suitable secured loans or mortgages and it is hoped that an agreement can be reached quickly, in time for when the housing market normally picks up in the springtime.
