Govt plan may bring back sub prime mortgages

Published: April 17, 2008

A plan is being finalised to ease the credit crunch and get banks back to handing out first-time buyer mortgages, potentially leading to a resurgence in sub-prime mortgages.

The BBC reports that the Bank of England and the government are looking into the finer details of the plan.

It would centre on allowing banks to swap mortgage assets for government bonds for a limited period of time.

This would then encourage banks to lend to each other at low rates again and should lead to more mortgages being made available and mortgage interest rates falling.

It is claimed that, once finalised, the scheme could be launched as soon as next week.

It is great news for people looking to take out first-time buyer mortgages, fixed-rate mortgages, sub-prime mortgages and bad-credit mortgages, as well as anyone else who is seeking a mortgage quote.

The government reportedly will not go ahead with the plan unless the tax payer is completely protected from any losses.