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Death throes of a dying government

With the rift between Prime Minister Gordon Brown and chancellor Alistair Darling reaching untenable proportions, we should all be concerned about how much more damage the death throes of this ailing government will inflict on the mortgage market.

It now seems that the chancellor can no longer speak the truth without being punished. Darling’s candid admission regarding the dire state of the economy and acknowledgement that Labour supporters are angry were spot-on. Subsequently being forced to issue multiple scripted retractions smacked of the school playground.

This latest spat appears to arise from differing opinions about how to rescue the property market, with Brown as ever pursuing the wrong course and Darling siding with the angels and telling him not to be so stupid. Can’t they see that every time they intervene in the market their ineptitude makes things worse?

I accept the government can’t be held directly responsible for the global credit crunch that has replaced common sense with paranoia. But it is culpable for taking its eye off the ball in terms of a regulatory regime that has become more an instrument of bureaucracy than consumer protection. To get shafted we have to comply with more deforestation than ever before. That’s progress.

Of course, many borrowers are experiencing severe hardship – first because they borrowed more than they could realistically afford and second because they were encouraged to do so by profligate lenders and imprudent brokers chasing profit.

So why does anyone think taxpayers should foot the bill? Where are the lessons learnt, the common sense or the fairness in that? Yes, there is a role for the government to play in terms of addressing the situation but not by raiding the pockets of consumers who were sensible enough to borrow within their means.

Brown should let the impoverished seek debt counselling and come down hard on lenders that championed borrowing at 6 x income by empowering the Financial Ombudsman Service and Office of Fair Trading to hit them with significant fines.

And to kick-start the housing market, the government should make Home Information Packs voluntary not mandatory. This would allow firms currently profiting from HIPs to continue making a living from them but only after marketing and selling their product as other retailers have to do. See how enthusiastic sellers would be then.

For those of us who always knew HIPs were a waste of time, we can replenish the country’s housing stock by periodically test-marketing our properties to see if we get a bite. Gosh, I should be in power.


A failure to tackle liquidity

The Intermediary Mortgage Lenders Association says the government’s mortgage rescue package fails to address underlying liquidity problems but hopes the completion of Sir James Crosby’s housing finance review will free up additional funding for lenders.

AMI says UK should follow US example

The Association of Mortgage Intermediaries is calling on both Sir James Crosby and the UK government to follow the example set by the US in its attempt to rectify the capital markets.

First-time buyers still struggling reports CML

Loans for first-time buyers continued to decline in July, while remortgaging rose and lending for house purchases held steady, compared with June, show figures from the Council of Mortgage Lenders.


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