This article is from the source 'bbc' and was first published or seen on . It will not be checked again for changes.
You can find the current article at its original source at http://news.bbc.co.uk/go/rss/-/1/hi/business/7530273.stm
The article has changed 10 times. There is an RSS feed of changes available.
| Version 5 | Version 6 |
|---|---|
| UK mulls mortgage market options | UK mulls mortgage market options |
| (10 minutes later) | |
| The government may have to give a taxpayer guarantee to billions of pounds of mortgage market bonds if it wants to recover from a credit crunch. | The government may have to give a taxpayer guarantee to billions of pounds of mortgage market bonds if it wants to recover from a credit crunch. |
| The option is one of a number raised by Sir James Crosby as part of a report commissioned by the Treasury that looks at ways to revive the mortgage market. | The option is one of a number raised by Sir James Crosby as part of a report commissioned by the Treasury that looks at ways to revive the mortgage market. |
| But such a move would be controversial and could be seen as the partial nationalisation of mortgage finance. | But such a move would be controversial and could be seen as the partial nationalisation of mortgage finance. |
| It comes as figures showed new mortgage approvals had fallen to a record low. | It comes as figures showed new mortgage approvals had fallen to a record low. |
| 'Gloomy' | 'Gloomy' |
| Sir James is the deputy chairman of the City watchdog, the Financial Services Authority. | Sir James is the deputy chairman of the City watchdog, the Financial Services Authority. |
| HAVE YOUR SAYWhy should my taxes go to pay off other people's mortgages when I can't even afford a mortgage myself?Lisa Butler, UK href="http://newsforums.bbc.co.uk/nol/thread.jspa?forumID=5168&edition=1&ttl=20080729114645">Send us your comments | |
| According to the BBC's business editor Robert Peston, Sir James's assessment of the health of the British mortgage market is about as gloomy as it is possible to be. | According to the BBC's business editor Robert Peston, Sir James's assessment of the health of the British mortgage market is about as gloomy as it is possible to be. |
| In recent months, the availability of mortgages has been reduced by banks and building societies, and many of them are asking for larger deposits or are lending smaller amounts. | In recent months, the availability of mortgages has been reduced by banks and building societies, and many of them are asking for larger deposits or are lending smaller amounts. |
| Sir James fears that a long-term mortgage drought would turn the current downturn in house prices and consumer spending into something considerably worse. | Sir James fears that a long-term mortgage drought would turn the current downturn in house prices and consumer spending into something considerably worse. |
| One option for improving the availability of mortgage finance would be for the government to guarantee new better quality mortgage-backed securities, to re-stimulate demand for these securities. | One option for improving the availability of mortgage finance would be for the government to guarantee new better quality mortgage-backed securities, to re-stimulate demand for these securities. |
| That may be necessary, Sir James says in the report, in view of the government's objectives of supporting financial stability and operating in the long-run interest of consumers and the economy. | That may be necessary, Sir James says in the report, in view of the government's objectives of supporting financial stability and operating in the long-run interest of consumers and the economy. |
| However, he pointed out that the government would need to ensure that any steps it took did not create a "moral hazard", where there was less of an incentive for participants in the market to behave responsibly. | However, he pointed out that the government would need to ensure that any steps it took did not create a "moral hazard", where there was less of an incentive for participants in the market to behave responsibly. |
| FROM THE TODAY PROGRAMME More from Today programme | FROM THE TODAY PROGRAMME More from Today programme |
| According to the BBC's business editor, any such plan where the government guaranteed bonds would essentially be seen as the taxpayer underwriting the mortgage market, and would be immensely controversial. | According to the BBC's business editor, any such plan where the government guaranteed bonds would essentially be seen as the taxpayer underwriting the mortgage market, and would be immensely controversial. |
| That is why the Chancellor is studying the proposal, but is not yet ready to commit to it, our correspondent said. | That is why the Chancellor is studying the proposal, but is not yet ready to commit to it, our correspondent said. |
| 'Housing bubble' | 'Housing bubble' |
| The Liberal Democrat Treasury spokesman, Vince Cable, told the BBC before the publication of the report that he was uneasy with the idea for two reasons. | The Liberal Democrat Treasury spokesman, Vince Cable, told the BBC before the publication of the report that he was uneasy with the idea for two reasons. |
| "First of all this is a straightforward proposal to let the government take the risks for private lending and companies will continue to make their profits from it," he said. | "First of all this is a straightforward proposal to let the government take the risks for private lending and companies will continue to make their profits from it," he said. |
| "Secondly because it could have an effect of simply reflating this housing bubble that is now bursting in a rather painful way and reflate it in a way that prevents first time buyers ever getting on to the ladder." | "Secondly because it could have an effect of simply reflating this housing bubble that is now bursting in a rather painful way and reflate it in a way that prevents first time buyers ever getting on to the ladder." |
| This is one of a number of other options outlined in the interim report, which also includes industry-led initiatives to facilitate the development of a "gold-standard" for mortgage-backed securities. | This is one of a number of other options outlined in the interim report, which also includes industry-led initiatives to facilitate the development of a "gold-standard" for mortgage-backed securities. |
| Sir James said he would work with interested parties over the summer months and produce his recommendations "as soon as possible thereafter". | Sir James said he would work with interested parties over the summer months and produce his recommendations "as soon as possible thereafter". |