Local authorities should provide below market rate lending to people who face repossession, a new report suggests.
Homeowners who are having difficulty with meeting their mortgage repayments should get better assistance from local authorities, it has been suggested.
According to the New Local Government Network (NLGN), councils should offer below market rate mortgages to those who are struggling, as well as to first time buyers who find themselves priced out of the market.
The comments come as new figures from the Royal Institution of Chartered Surveyors provide further evidence of a housing market slowdown in the UK. New mortgage approvals are running at less than half the rate of just one year ago, and are also currently at their lowest level for over 30 years. What's more, the Council of Mortgage Lenders is also predicting home repossessions to rise over 2008 due to the increasing cost of food and fuel faced by householders.
Anthony Brand at NLGN commented: "Prudential borrowing would support lower-interest debt than the markets can support. With mortgage defaults up 17 percent this year, and likely to top 100,000, supporting those areas hit hardest could be vital to sustaining communities. This could help up to 15,000 people out of difficulty and even provide a long-term profit."
To this end, Mr Brand recommended that £2 billion of government funding should be set aside for the new mortgages.
