"Decisive action" needed over home loans

2 September 2008

In order to rejuvenate the property market in the face of ongoing banking problems, the government must take "significant and decisive action" over home loans.

This is according to the Royal Institution of Chartered Surveyors (Rics), which called on the Labour administration to help increase the number of available mortgages.

The organisation has advised the government to allow the Bank of England to guarantee the issue of new mortgage-backed securities, which are described by Rics as "home loans which are parcelled up and sold on to other investors".

"While we wait for the government to act on all the necessary fronts, many home owners are trapped in a market offering little or no mobility without any prospect of good cheer in the autumn," stated Rics director of external affairs Gillian Charlesworth.

In related news, chief executive of Firstrung Paul Holmes recently warned that people may be getting into mortgage arrears due to high house prices, adding that house prices currently stand at 35 per cent above the trend line for affordability.

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