UK Money News
24th April 2008
Mortgage market rescue plan 'will have limited effect'
Borrowers should not expect the government's moves to improve lending conditions in the market to bring about a return to the favourable home loan terms being offered before the credit crunch, one of the UK's largest mortgage brokers has warned.
This week, the Treasury and the Bank of England committed to a £50 billion rescue plan whereby lenders are permitted to swap mortgage backed securities for government bonds.
It is hoped that by easing the situation in the money markets for banks in this way, borrowers will benefit as a result of banks being more willing to offer mortgages.
However, according to Katie Tucker of John Charcol the impact of the move will be limited.
She said: "Mortgage rates may stop rising but they won't return to the exceptionally low levels of last year, because the lenders were not pricing at cost in 2007; they were pricing at a loss to attract market share of borrowers.
"100 per cent mortgages, or the higher income multiples and looser credit scoring of the past few years won't be surprising us with a best-of comeback for quite some time."
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