The prime minister won favourable coverage over the weekend for his claim that he would abolish 100 per cent mortgages.
Forget the fact that he was Chancellor during the decade when such products grew 10-fold without any intervention from the government. Forget the point that the horse has already bolted; most of the 150-odd products letting people take out a mortgage with no deposit have now been killed off by newly cautious banks.
The real proof that Gordon Brown never understood the risks attached to these loans lies in the fact that his own government introduced a new product – well after the crash began – letting poor people buy homes with zero equity.
Under the new “HomeBuy Direct” scheme introduced last September, first-time buyers can borrow up to 30 per cent of the value of a new-build home – interest-free for five years – co-funded by both the government and housebuilders. The other 70 per cent would come from a conventional mortgage.
In case you need a link to my original story it’s here.
UPDATE:
Guido has some more interesting thoughts on the issue here.
Jim Pickard
Kiran Stacey
