26.08.08 by Andrew Montlake

Competitive Mortgages From The Council ?

In a blaze of fireworks and intricate dancing the Olympic spectacle came to a close, but not before we saw Mr Beckham and a red London bus ! Although many will no doubt be a bit perturbed about a return to the mundane, it is important we all build on the good feeling Team GB have left us with.

To me this represents the end of the summer – what summer ? – and a time to get stuck into the hard work ahead of us and make a positive contribution.

Anyway, it seems that some council chiefs want to go back to the early 1980’s and start offering mortgages again. In a letter published in The Times, they want to borrow £2 billion pounds from a Treasury Agency and argue that “the public sector should be able to help first-time buyers and those unable to secure a home loan”.

Councils can offer mortgages but regulations introduced in the Eighties ties them to an uncompetitive interest rate and prevents them from undercutting private sector rivals. “In 1980, 600,000 mortgages with homeowners were held by local authorities,” the councilors say in the letter. “Since then, the banking industry has almost universally taken on this role.

I’m just not entirely sure about this one. They would need to follow the FSA regulations and who would actually be advising the customers that this is the best option for them ? I know it would represent more choice for the consumer, which of course is a good thing, but the reality is that this would take a while to set up, and would need to be set up very carefully to ensure that the right people are leant to.

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