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Low cost homes to be built in rural areas are the latest proposals from Gordon Brown to meet his target of three million extra homes. The scheme would be the biggest building programme in the countryside for a generation and would attempt to create thousands of affordable homes in rural areas. Many market towns would see communities built next to them, which would be large enough to have their own pubs, schools and shops. The main aim of the scheme are for teachers, farm workers and craftsmen who live or work in villages to own a home for the first time, while a change in planning rules under s.106 of the Town and Country Planning Act 1990, will enable parish councils to identify sites for homes where demand for affordable homes is so high that they can justify ‘exceptional’ planning approval, providing more lower-income families access to affordable homes.

House prices fell for the sixth month in a row, and annual house price growth stalled in March according to the Hometrack house price index. The average cost of a home in England and Wales increased by just 0.4 per cent from this time last year, while prices fell by 0.2 per cent with 29 per cent of postcode districts seeing a reduction of house prices during March. Hometrack expects that there will be a 17 per cent fall in transactions during 2008.

Ken Livingstone aims to seduce first time buyers this week by pledging to make home ownership in the capital cheaper through new shared ownership schemes. This would require buyers to find just a 10 per cent stake in a property. This pledge came about due to warnings that even a property crash would not make the capital affordable for young couples.

Meanwhile in Scotland, the length of time people who are homeless while councils find them accommodation has trebled. The report, by the Homeless Monitoring Group, found that unintentionally homeless people remained in ‘priority need’ for more than four months before being housed, due to a lack of affordable social housing. Scottish Housing Secretary, Stewart Maxwell, said that progress was being made, but there was a ‘way to travel’ and ministers were committed to eradicating homelessness by 2012.

Two year mortgages could be a thing of the past according to analysts. Cheap deals will disappear and be replaced by one expensive standard rate. Nationwide raised rates on its two-year trackers so much that now some are higher than its standard variable rates. Its two-year tracker for new borrowers with a 5 per cent deposit went up from 6.43 per cent to 7 per cent, which is above its SVR at 6.74 per cent. Furthermore the two-year fixed rates has been lifted by 0.2 percentage points.

And finally, forget a tour to the homes of the rich and famous, or the theme parks of Florida. For the latest and most popular tour you need to take a six-hour tour dubbed the ’foreclosure express’ to view some of the dozens of empty properties already repossessed by lenders. The bus tour, complete with real estate agents, lawyers, mortgage brokers and a property appraiser accompanying would-be buyers, and costing $45 including breakfast and lunch at a fast food restaurant, has proven so popular that further tours are planned for next month.

Nationwide has reassessed its forecast that there will be no change in house prices by the end of the year after UK house price inflation fell to its lowest level in 12 years, down 0.6 per cent, and cutting the annual rate of increase to 1.1 per cent. Nationwide now predicts a fall in prices saying: ‘a moderate fall in prices… should not be unwelcome and should help to ensure greater stability in the market going forward’. Despite the slowdown, prices are still 11 per cent higher than they were two years ago, and 47 per cent higher than five years ago.

Nationwide, along with Halifax, two of the countries biggest mortgage lenders, yesterday increased their rates sharply in an attempt to shut the door on all but the most creditworthy investors. Nationwide said it did not want to take on many more customers as it would add too much risk to its books.

Further figures, from the British Bankers’ Association (BBA), confirm the downturn in the market as mortgage lending is down a third on the same time a year ago. People who do not move but change their mortgages to more favourable deals now account for nearly half of all new mortgages granted by banks. The BBA argue that the UK housing market is going through a ‘two-way squeeze’ as banks are finding it harder to raise funds in the financial market. And with less money available to lend, banks are having to make it more expensive for borrowers, while rapidly rising house prices have driven many would be owners from the market.

And according to research from iammoving.com, one in five of all those looking to move house in the near future are considering getting off the property ladder altogether while prices are high, and renting until prices have fallen. A further 14 per cent planning to move are thinking of renting to free up some of the money they have tied into their homes, to ease cashflow problems.

A ban on sex offenders from being housed in bail hostels near schools has undermined public protection and led to a shortage of places for offenders and resulted in some dangerous offenders being inadequately monitored in the community, according to a report by the inspectorate of constabulary, probation and prisons. The inspectors said that plans to create new hostels to meet the needs of the system have proved impossible because of local opposition. The ban, affecting 14 of the 100 hostels in England and Wales, was introduced in 2006 by then Home Secretary John Reid.

And finally, two of England’s oldest council homes, built during the reign of Henry 8th, have been sold finally. The local council decided to sell the homes to raise funds for affordable houses when they realised that renovation work would cost around £40,000 for each property. The derelict properties sold for £169,000 each, and the council plan to use the money to build 100 new affordable homes by 2010.

Mervyn King, governor of the Bank of England (BoE), said yesterday that the credit crunch had entered a ‘new and difficult phase’. He has indicated that action to buy or swap the mortgage-backed securities which have caused the credit squeeze may be needed, along with a reduction in interest rates. King’s remarks to a Commons Treasury committee came as the interbank cost of borrowing (LIBOR) rose again for the 12th successive day, to 6 per cent. The BoE’s base rate is expected to decrease to 5 per cent in April, rather than May, with a further cut to 4.5 per cent likely by the end of the year. King added that he thought the housing market would stay in the ‘doldrums’ for several years.

King’s comments come as Asda released figures showing that cost of living increases outpaced the rise in income last year. Families are now £7 a week worse off than a year ago, as household bills and increased taxes have taken their toll. Added to this for 1.4 million people will be an increase in mortgage costs as the period of fixed-rate mortgages comes to an end.

A number of homeowners are turning to expensive 10-year, fixed rate mortgages in an attempt to protect themselves from financial turmoil, according to the price comparison website, moneyexpert.com. Twelve per cent of all fixed-rate deals are now for a decade or longer, compared to 9 per cent a year ago, as borrowers look for greater financial security in knowing how much they will need to pay for the foreseeable future. The research comes at a time when more lenders are pulling out of shorter (two, three and five-year) deals, or ‘repricing’ them.

Gordon Brown came under fire today after being accused of ‘bandying around misleading statistics’ on the housing market in an attempt to minimise the perception of a faltering economy. Nick Clegg, Liberal Democrat leader attacked the prime minister in parliament yesterday for denying the UK was on the cusp of what could be a big housing crash, saying: ‘The prime minister was both complacent and disingenuous in his response to the very real concerns that the housing market is now facing an almost identical situation to that in the 1990s’. Mr Clegg quoted Ministry of Justice figures showing that more than 95,000 repossession orders were made last year, just a fraction below the 103,000 orders made in 1990 at the start of the last housing crash. Mr Brown replied that only 27,000 repossessions were made last year.

The government is to extend the Human Rights Act to protect up to 300,000 people who have been placed by local authorities in privately run residential and nursing homes. A £2 million venture will investigate the extent of abuse older people in care houses and NHS wards face, while promising to give people funding their own care, a right to appeal to an independent adjudicator if staff do not deal with complaints about the standard of service.

And finally, 44 per cent of first-time buyers would be willing to move abroad to get a foot on the property ladder, compared to last year’s figure of 25 per cent, according to website fairinvestment.co.uk. This is backed by further research by HSBC which reveals that Britain is the third most expensive country to live in, after France and Norway. The HSBC study estimated that a yearly British wage would last for more than two years in Peru, Argentina, Egypt or Costa Rica.

Figures out yesterday from moneyfacts.co.uk indicate that the number of mortgage deals has fallen by almost two-thirds since July 2007. The biggest shrinkage has been among sub-prime and buy-to-let mortgages, and is accompanied by lenders demanding bigger deposits and rising interest rates in some deals. Abbey National is now the last lender offering 100 per cent mortgages to the mainstream market. The Council of Mortgage Lenders has warned that there will be a £30 billion ‘funding gap’ this year between the amount borrowers need and the money available.

In February, the number of people planning to buy a new home hit its lowest level since the 1990s, say the National Association of Estate Agents. NAEA revealed that the number of buyers its members had on its books dropped last month to its lowest average since the survey started, but suggested that the decline is unlikely to be as bad as the last recession, as potential buyers had not disappeared entirely but were anxious about mortgages and ‘waiting to see how things change in the next few months’.

And soaring levels of debt among those in their late 50s and early 60s means that many people will have to stay working until after their retirement age, according to a study by Help the Aged. These older borrowers owe at least four times as much as people of the same age a decade ago, with an average of £2,500 in unsecured debt. And more than 1.5 million people over the age of 60 have a mortgage, owing an average of £30,000 on their homes, a figure that had trebled over the past decade.

And council tax rises show another widening of the north/south divide with bills in the south increasing up to three times faster than northern towns. The figures, collected from parliamentary questions show that the lowest council tax increase was in Liverpool, which rose by 49 per cent between 1997 and 2007, compared to the City of London where receipts rose by 206 per cent. The Labour government is accused of giving extra subsidies and grants to northern towns to bolster the party’s support in May’s local elections.

Meanwhile the queue for a council house has almost doubled in the past decade, in the most crowded parts of the country. Waiting lists have gone up 87 per cent in London and 95 per cent in the rest of the South East, while for England as a whole, the register has lengthened by more than half since Labour came to power in 1997. In contrast, the waiting list for the North East has increased by 10 per cent.

In America, house prices continue to fall. The latest monthly Standard & Poor’s/Case-Schiller index (which records property values in 10 cities across the country) showed that house prices fell at an annual rate of 11.4 per cent in January, the biggest year-on-year decline in 21 years. The fall in prices has been a significant factor in hitting US consumer confidence, which is now at its lowest point March 2003, just before the US-led invasion of Iraq.

And finally, the Financial Services Authority admitted to a series of failings in its handling of the Northern Rock crisis. The findings identified four key areas where it said supervision fell short of acceptable standards and makes a number of recommendations for improvements in future including taking on better-trained staff, and more of them. However the FSA said that even if supervision of Northern Rock had been at acceptable levels ‘it was by no means the case that that would have changed the outcome’, and they had expected the central bank would have increased the amount of ‘general market liquidity’ in the event of such a crisis.

House prices could fall by up to 20 per cent over the next two years, a senior economist warned yesterday. The prediction, from Professor David Miles, chief UK economist at Morgan Stanley, will dismay millions of homeowners. At present, the average house price is about £200,000. If Mr Miles is correct, it could fall as low as £160,000 by the end of 2009. The biggest losers will be those who have forked out a fortune to buy a home over the past couple of years. However, Professor Miles, a former government adviser, insisted such a fall would not be a catastrophe. He said: ‘I am at the pessimistic end of the spectrum, but I don’t think it should be seen as the pessimistic end because there are as many gainers as losers.’ The winners, he said, will be first-time buyers and those on lower salaries who will finally be able to afford to buy.

But Citizens’ Advice warned yesterday that the number of house repossessions is already soaring. Higher interest rates, rising energy and food bills, fuel prices and bigger council tax demands are forcing consumers into debt, research revealed yesterday. Citizens Advice said a survey of three-quarters of its bureaus in England and Wales showed they had dealt with 215,000 new debt problems during the first two months of 2008. More than 9,300 were seeking help with mortgages – 35 per cent up compared with the same period in 2007.

And there was more gloom in store for the middle classes, a leading debt group said yesterday, as more of them become victims of the spiralling debt crisis because of ‘super-inflationary’ rises in the cost of living. The Consumer Credit Counselling Service said that while steep rises in energy and mortgage costs had hit the oldest and poorest hardest, the increases had been so dramatic that even the professional classes were struggling. Experts said that the figures marked a more serious era in the country’s battle with debt because they showed that the problem had extended from borrowers with credit cards and personal loans to all households, irrespective of how much they had borrowed or what they earned.

The Budget promise to reduce child poverty has been welcomed by commentators including Polly Toynbee in the Guardian, but a number of critics argue that the government’s poverty goal is unlikely to be met. The Institute for Fiscal Studies said that there would be a shortfall, even after Alistair Darling devoted what money he could spare to poor families with children. In the Budget, Mr Darling boosted child benefit for the first child to £20 a week from April 2009, increased the generosity of child tax credits and said that in future the calculation of housing and council tax benefits would ignore child benefit in their means-tests. This package will cost taxpayers £870 million in 2010-11. The IFS confirmed Mr Darling’s claim that it was likely to reduce by 250,000 the number of children living in families with incomes less than 60 per cent of the national median, the government’s poverty line. But the thinktank added that about £2 billion to £3 billion more would be needed for Mr Darling to have a 50:50 chance of halving child poverty by 2010-11, compared with the 1998-99 level – a target confirmed by James Purnell, work and pensions secretary, in the Commons yesterday.

The National Trust has warned that growing demand for land to build homes is putting pressure on precious natural resources. In a report, the Trust said the rising population is fuelling the need for more space to grow food, build homes and work places and was stretching vital environmental life-support services to the limit. The report says land and its natural resources were undervalued, underfunded and needed better care. It calls for more money to be pumped into protecting the major public benefits from the land including drinking water, flood protection, better health and help in tackling climate change.

The latest chapter in the continuing credit crisis has resulted in first-time home buyers being hit as lenders pull the plug on all but the lowest risk loans. Harsh new conditions set by banks and building societies may leave many borrowers unable to get a mortgage after the sudden demise of Bear Stearns fuelled concerns that the credit crunch will prove deeper and more enduring than was first thought. Lenders, desperate to reduce their exposure to risky debt, are turning away borrowers with small deposits or a credit-record glitch as small as a single missed payment. The number of home-loan deals available has plunged and the number of unexpectedly denied loans has soared. Hundreds of thousands of existing homeowners can expect to be hit with higher interest rates in the coming months. Experts are now warning that the fallout from the US will even affect ‘safe’ prime mortgage borrowers as banks become increasingly jittery and attempt to shield themselves from any housing market downturn.

The housing market may be in free fall, but in the least affordable parts of the country house prices are still booming. In St Ives, Cornwall, a two-up, two-down seaside semi is up for sale at a price tag of £1 million. ‘Waterside houses are big business,’ said one local estate agent. ‘There are houses which have been valued at £3 million to £5 million and they are being snapped up.’ Some of the prospective buyers are said to be Russians with millions to spend on British property.

Northern Rock has been accused of abusing its government guarantee to grab savings business from other banks, a practice officials say will be stamped on by authorities in Brussels. The bank, which last month became the first UK mortgage lender to be nationalised in more than 25 years, topped 11 out of 19 categories of savings products earlier this month in a best buy table, a British banker said, with several accounts paying 6.25 per cent, well above the Bank of England base rate. Neelie Kroes, EU competition commissioner, is expected to end that practice as one of her conditions for approving the UK Treasury’s continued £24 billion support operation.

But a solution to the credit crisis and its impact on mortgages appears to be a long way off today as the world’s stock markets plummeted. The Bank of England warned that credit markets continue to deteriorate and that there is a serious danger of further writedowns by the banks, with the difficulty of securitising loans and mortgages posing a particular problem for the property market and the economy as a whole. The Bank moved to pump £5 billion into frozen money markets as London’s leading shares tumbled on the latest impact of the credit crunch. Policymakers made the move to ease overnight lending rates between banks spooked by the bail-out and the cut-price sale of troubled investment bank Bear Stearns. London’s FTSE 100 Index fell more than 2.5 per cent as leading banks such as Halifax Bank of Scotland and Barclays bore the brunt of the sell-off. The £5 billion was only about a fifth of what banks had called for.

A major expansion in occupational health services to keep people in work and off disability benefit is recommended in a report published today. The report, by Dame Carol Black, the National Director for Health and Work, calls for universally available, stronger and more integrated services designed to detect problems early and allow people to continue working. Dame Carol’s report says that services need to be combined with social care and advice about debts and stress, to try to prevent a short-term absence from work turning into a lifetime on benefits.

Where does buy-to-let go from here? asks today’s Guardian. The paper is concerned about investors who bought property to finance retirement and are trapped by negative equity and soaring costs. Just 18 months ago, retired teacher Judith Andrew was convinced by a mortgage broker that a buy-to-let flat would be her ticket to a more comfortable retirement. But now the flat’s value has slumped by a quarter, the rent falls far short of the loan payment, and she faces a 50 per cent mortgage increase later this year. Meanwhile, the UK’s biggest property investment club, Inside Track, last week decided to suspend its buy-to-let ‘Become a property millionaire’ seminars, and one of the biggest lenders in the market, Paragon, is axing 93 jobs.

More battering for homeowners whose properties were lashed by last nights gales. The housing market experienced its most severe downturn since the housing slump of the 1990s last month, according to new research from the Royal Institution of Chartered Surveyors (RICS). More surveyors saw house prices fall in February than any other time since June 1990, said RICS while the stock of unsold property on estate agents’ books rose by more than 8 per cent in February for a fifth consecutive month, reflecting dwindling sales and falling interest from new buyers.

The malaise has spread to the building industry with Bovis Homes reporting a 20 per cent fall in sales so far this year. Malcolm Harris, chief executive of Bovis, said it was only a matter of time before the company had to start cutting jobs if conditions did not improve, adding that mortgage lenders should also do their bit to make it easier for homeowners to borrow money.

New immigrants into the Uk will be taught how to claim benefits under an extension of the Time Together scheme, run by the Timebank organisation. The mentoring scheme has been hailed as ‘a good way of providing refugees with a greater sense of confidence and a better understanding of British culture,’ by former attorney general, Lord Goldsmith.

Tenants on the Robin Hood Gardens estate in Tower Hamlets have issued a challenge to their local council, English Partnerships, and the architects responsible for the redevelopment of their estate: let us judge the submissions at an open tenants’ meeting. With ‘tenant participation’ so far failing to deliver on its promises, will Tower Hamlets listen to its residents?

The Bank of England has left interest rates at 5.25 per cent for the second month. The decision was not unanimous – six members of the Monetary Policy Committee, which determines the rate, wanted to keep the rates unchanged due to rising inflation, while three members argued for an immediate cut in rates.

Halifax’s house price index is out again, and figures show that growth slowed for a sixth consecutive month in February, down 0.3 per cent from January. This brings the annual rate down to 4.2 per cent, the lowest since October 2005.

And it looks like the buy-to-let property boom is over too. The Royal Institution of Chartered Surveyors released its quarterly letting survey today, revealing the first fall in new landlord instructions to surveyors (to let their properties) since the study began in 1998. The credit crunch’s restrictive lending criteria has reduced the number of buy-to-let mortgages approved, as well as the number of mortgages available to investors. However, RICS said that established investors were reaping the benefits of gross rental yields (rent as a percentage of a property’s value) increasing at its fastest rate since 2005.

And throughout Europe, nearly all countries suffered a sharp drop in prices or house price inflation, according to a further study by RICS. However it said that the effects of the global credit crunch, which is driving up borrowing costs in Britain, has yet to hit the ‘eurozone’, as mortgage finance remains readily available there. Never-the-less, Britain had the sixth biggest house price increase in Europe last year, while Poland came out on top with a 28 per cent increase.

The Joseph Rowntree Foundation (JRF) has called for a new safety net – a new form of insurance for homeowners – to be introduced to prevent those unable to meet their mortgage repayments from losing their homes. The scheme, funded in part by both government and lenders, would replace the government’s income support for mortgages and would cover 10 months of complete mortgage payments should the borrower become unemployed, fall sick or have an accident. JRF believe that getting lenders to part-fund the scheme would give them an incentive not to rush to repossess.

The chancellor, Alistair Darling is expected to announce in next week’s budget that mortgages will be graded in Britain – with the least risky given an official seal of approval. The aim is to ‘unfreeze’ the market for mortgage securitisations, where lenders sell packages of mortgages to long-term investors, and to relieve funding problems that are increasing the cost of borrowing. Some experts warn of the possibility of creating a two-tier system, where the poor and higher-risk homebuyers may find the mortgages they are offered prohibitively expensive.

The government is coming under increasing pressure to help poorer families and pensioners in the next budget, as cost of living soars. The average household is £5 a week worse off than last year, as the cost of living rose by nearly 5 per cent. Although wages increased, bills for essentials such as food and trasnport increased by more, while energy costs have pushed more than four million households into fuel poverty.

And finally, the Duchess of York is to use her experience of ‘eating disorders, low self-esteem, family conflict, financial crisis, divorce and bereavement’ to help families on a housing estate in Hull improve their lifestyle. And the good cause – an ITV reality TV show to be screened in summer. Understandably some of the residents of the estate were sceptical that the duchess would be able to transform their lives.

The average household is £5 a week worse off that last year, according to research by the Centre for Economics and Business (CEBR). Although earnings increased, the cost of living rose by 4.9 per cent meaning disposable income has fallen to £138 a week. And as Alistair Darling’s first budget is due next week, it is believed that ministers are growing concerned about rising fuel and mortgage costs. A further report is to be published alongside the budget, calling for the introduction of more long-term fixed-rate mortgages, as well as vouchers to help the poorest households with their gas and electricity bills.

And it can’t come too soon for some. Homebuyers have been hit with a new blow, after two banks raised their mortgage rates, increasing the cost of a £150,000 mortgage by £270 a year. Abbey has raised its tracker mortgage, while Halifax has raised its fixed rate mortgage, by between 0.1 and 0.15 per cent. A spokesperson for the research said that banks are paying ‘absolutely no attention to what the Bank of England does as far as interest rates are concerned’.

Around one in five mortgage holders (2.3 million people) are worried about meeting their repayments in the next 12 months, according to the Financial Services Authority (FSA). However when mortgage holders were asked how they would meet the increasing costs, a quarter said they had made no plans to address the problem. The FSA is so concerned about the situation that it is launching a £2 million advertising campaign and advice guide for homebuyers, as part of the £12 million pathfinder project the government launched yesterday. The initiative is especially focused on people whose fixed rate or discounted deals are coming to an end this year.

And it’s not just the customer feeling the pinch – British banks have lost more than £12 billion on 2007 as a result of the US property market collapse. Yesterday, HSBC announced the biggest loses of any British financial institution , after being left with £8.7 billion of debt in the US sub-prime market. It is feared that they will rein in their lending even more, worsening the credit crunch and holding back economic growth.

And finally, do you know who said: ‘You must defend those who are helpless and have no hope. Be fair and give justice to the poor and homeless’? If you answered Bob Geldof, you and a quarter of Britons are wrong, and confusing your Sir Bobs with the bible. According to the Bible Society, there are more than 2,000 verses in the ‘good book’ dealing with poverty and injustice, which will be highlighted in a new ‘Poverty and Justice’ Bible, along with practical suggestions on what individuals can do to alleviate such problems.