New measures announced by the Treasury could help to get UK mortgage lending back on track. Despite the bail-out at the back end of 2008, banks are still struggling and need more Government help.
The Treasury announcement says that a mechanism will be provided to insure against banks suffering more losses due to so-called ?toxic debt?, which has stifled banks and made them afraid to lend, which has adversely affected the UK property market.
Treasury officials will sell insurance to banks to protect them for 90 per cent of however much they lose from the toxic debts.
In a closely related move, the Government has also said that Northern Rock ? now nationalised ? will not be looking to offload as many of its existing mortgages.
A Treasury statement said: ?Mortgage-backed securities supported a third of mortgage lending and the revival of this market is an important element of increasing the capacity of lenders to provide mortgages as demand increases in future.?
The measures were met by mixed reactions from opposition parties and property businesses. Some experts queried what had happened to the billions that had already been heaped onto the banks in the previous bail-out.
Vince Cable, Liberal Democrat shadow chancellor, agreed that getting banks lending quickly again was the key to getting the UK property back on its feet.
As yet, the number of mortgages making their way through the system is very low. The Council of Mortgage Lenders said last week that only 12,400 new property loans were approved in November. That is the lowest number on record, since monitoring began in 2002.
