Government bailout 'to save housing market'

Posted: 09 Oct 2008 12:57:39 GMT

            Property News - Government bailout 'to save housing market'

A proposed £500 billion bailout package should help the mortgage and housing market to recover.

That is according to mortgage broker John Charcol, which warns that despite the government intervention, things may not return to the way they were before the credit crunch for at least the next two decades.

Ray Boulger, mortgage broker at the company, said: "It's a new game in the mortgage market for a long time, over the next ten to 20 years at least.

He explained that the Swap rates - the fees levied on banks for borrowing funds from one another - have begun to fall again following a rapid rise in the fallout of the Lehman Brothers collapse.

Mr Boulder also suggested that financial institutions will once more be offering 100 per cent mortgages by the end of next year.

"The important factor is affordability. With interest rates falling and property prices down, affordability will improve and the market will stabilise."

It is hoped that the bailout will restore confidence to banks to lend money to homeowners at more affordable rates meaning that mortgage and remortgage approvals should begin to rise from the all-time lows reached in August.

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