A number of reports have suggested that the government is set to guarantee mortgages in an effort to get the property market moving.
The government is in talks to provide insurance for mortgage lenders in its latest move to help the ailing housing market, reports have suggested.
A number of the biggest names in banking met with Gordon Brown at Chequers - the prime minister's official country residence - yesterday for lunch, fuelling speculation that further action from the government on the banking sector is imminent. The industry has already seen an unprecedented bailing out of some of its biggest names by the taxpayer.
The scheme mirrors suggestions made by former HBOS boss Sir James Crosby in a report published in November. It would see bank bonds which use mortgages as collateral be guaranteed by the Treasury.
With the UK economy expected to be officially classed as in recession when official figures on GDP growth are published later this month, some are calling for the action to be speeded up.
"We need to move quickly - even within the next fortnight so that banks can start increasing the flow of money to potential mortgage holders", a senior banking executive told the BBC. "January and February are slow anyway for housing activity. Easter is the usual start of housing period."
Despite not being mentioned in the Crosby Report, it has been suggested that the government guarantees could be extended to cover small business loans and other debt, providing further assistance to the economy.
