The chancellor Alistair Darling has urged mortgage lenders to pass the recent interest rate cuts on to homeowners, saying it was time lenders ‘played their part’ after the Bank of England injected £15 billion into the financial system. After conceding on Friday that the present financial troubles are the ‘biggest economic shock since the Great Depression’, Mr Darling pleaded with banks to pass the interest rate reductions to ‘help homeowners, help businesses, [and] that will help all of us get through a very difficult time’. He also reminded the lenders of their duty to do all they can to avoid repossessions by reworking mortgages, offering people lower monthly payments and extending their terms.
Shadow chancellor George Osborne is expected today to pin the blame for the credit crisis directly on the government. In a speech to the Policy Exchange thinktank he is expected to say that the root of the problem is the failure of the government’s economic policy, that ‘after a decade of worldwide growth we have ended up with a housing boom, followed by bust, spending followed by debt, and a country finding it more and more difficult to compete’.
Meanwhile at a meeting of the Institute of International Finance (IIF) in Frankfurt over the weekend, bankers acknowledged that ‘weaknesses in business practices’ including the management of risks may have contributed to the crisis. They say that they must improve their risk management and disclosure and compensation practices to help prevent a repeat of the current crisis. However they stop short of allowing greater regulation within the industry.
The Council of Mortgage Lenders (CML) has warned that mortgage lending could be ‘cut in half’ in 2015 if no extra funding comes from the Bank of England. Without the Bank putting into place incentives, such as allowing pension funds to buy mortgage-based securities, the CML believes that we will see an ‘ongoing process of attrition in mortgage choice’ that will tighten lending criteria, increase prices and lead to more products withdrawing from the market altogether.
And finally, a grandmother from Merseyside has applied for planning permission to demolish the home of Tesco chief executive Terry Leahy. In retaliation against plans to buy her home and 71 others under a compulsory purchase order to make way for Everton’s new stadium and a Tesco supermarket, Dot Reid plans to turn the Tesco boss’s house into a community garden. Ms Reid, who helped set up the housing cooperative under which they were given government money to build the homes said: ‘These are more than just houses, they are homes’.