Crosby review fails to please industry
Property industry experts yesterday sharply criticised the government commissioned Crosby report on the crippled state of the mortgage market for failing to take immediate action to relieve the problem.
In his interim report, published yesterday afternoon, Sir James Crosby, the former boss of HBOS, said the mortgage markets would remain jammed another three years, possibly until 2010, and that there was no silver bullet solution.
But Crosby suggested no immediate proposals to end the logjam in the home loan market, with Chancellor Alistair Darling not expected to announce any sort of intervention until the Pre-Budget Report in October.
This has angered mortgage experts and the property sector, who feel that not acting until the autumn could see house prices fall so much that it starts to seriously damage the wider economy.
Chief economist at The Royal Institution of Chartered Surveyors, Simon Rubinsohn said: “Its failure to propose any immediate changes in the mortgage market suggest that there will be little early relief for the housing market and most particularly for first time buyers.”
The Council of Mortgage Lenders said if no action is taken to revive the mortgage drought the “housing correction will overshoot, and the knock-on effects on the wider economy will be significant”.
The Key Points
- One of the key proposals is to allow an extension to scheme where British banks can exchange new mortgages for government debt.
- Crosby warned against the creation of a US-style agency like Fanny Mae that underwrite Britain’s 1.2 trillion pounds of mortgages.
- He also said the market for mortgage backed securities in the UK, currently worth £257bn, would benefit from greater transparency and standards for such assets.
- Crosby stopped short of providing formal recommendations, which he will set out in his second report in the Autumn.
- He is widely expected to propose a new kite-marking system for high-quality mortgage-backed securities.