ROOF Blog

Sir James Crosby’s report into mortgage lending was released yesterday giving further impetus to the government’s financial bailout, concluding that lenders’ inability to obtain capital to lend to homebuyers was the ‘sort of market failure that might call for government intervention, perhaps even on a significant scale’. The report suggested that without help the shortage of funds would mean net new mortgage lending would fall below zero. As expected from the interim review, the Crosby report believes the government had to intervene with a ‘large injection of funding’ into the banking system including providing a temporary guarantee, by taxpayers, of mortgage-backed securities to fund further lending.

This afternoon chancellor Alistair Darling will announce the pre-budget report that is expected to introduce tax cuts, including cutting VAT from 17.5 per cent to 15 per cent, while increasing government spending, in a boost to get the economy back on its feet. Also expected to be announced are a series of measure to stem the number of repossessions, which last week increased 12 per cent on the previous quarter, including a three months’ grace period before lenders start proceedings; allowing owners to sell parts of their homes to councils; and help with mortgage payments for the newly unemployed.