Prime minister Gordon Brown has called for a new approach to the mortgage marketing which could see 100 percent mortgages banned.
The prime minister is to put forward a series of new initiatives to 'reinvent' the country's mortgage market. Gordon Brown and chancellor Alistair Darling are preparing a package of measures to present to the Financial Services Authority (FSA).
Part of the prime minister's plan includes calling for a ban on 100 percent – or deposit-free - mortgages, products which were described as "foolish" by banking minister Lord Myners. He told the BBC's Politics Show this weekend that lenders and those in the "banking community" were sceptical of the loans, suggesting that changes to the mortgage system would see the return of "safe, secure, sober lending".
Mr Brown is now set to approach the FSA with a recommendation to rethink 100 percent mortgages. Writing in the Observer yesterday (February 22nd), the prime minister said that lenders need to exercise prudence when drawing up mortgages.
"We want to see the reinvention of the traditional savings and mortgage bank in Britain - making loans on prudent and careful terms, not just to people with large deposits but to first-time buyers and those on middle and modest incomes," he said.
Gordon Brown met other European leaders this weekend to discuss collective ways to tackle the global downturn. Prominent figures from the EU agreed that the IMF emergency fund should be doubled.
