• Sat. Nov 26th, 2022

Lenders push Kwarteng to extend mortgage guarantee scheme

BySwanzi010

Oct 6, 2022
What a day!

The UK’s biggest mortgage lenders will urge the chancellor to extend a government home loans initiative which helps first-time buyers get onto the property ladder.

Sky News understands that executives from major banks and Nationwide, Britain’s biggest building society, will ask Kwasi Kwarteng to commit to renewing the Mortgage Guarantee Scheme, which is scheduled to expire at the end of the year.

Launched in the spring of 2021, the scheme gives lenders an option to underwrite through the government the losses incurred on mortgages above 80% of the purchase price of a property.

The request to extend the scheme will form part of the banks’ agenda as they and the Treasury seek to address the disruption in the mortgage market following Mr Kwarteng’s ‘mini-Budget’ last month.

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Lenders will also highlight the need for stability in financial markets in order to price home loans properly, and will flag potential risks under the City watchdog’s new ‘consumer duty’ from agreeing to unaffordable mortgage loans.

Hundreds of mortgage deals have been pulled or frozen by banks in the last fortnight as a result of volatility in how banks price such loans.

The chief executive of the City watchdog told The Sunday Times at the weekend that he wanted lenders to justify the withdrawal of fixed-rate mortgage products.

“If a product is withdrawn for a temporary period, we want to understand when they’re going to come back to market so that those people who may need to refinance are able to proceed with their plans,” Nikhil Rathi told the newspaper.

Executives from Barclays, Lloyds Banking Group and NatWest Group are among those expected to attend Thursday’s talks.

UK Finance, the banking trade association, will also be represented at the meeting, according to a Treasury source.

Source : BBC News

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