Newly-assigned UK prime minister Gordon Brown has announced steps to improve the housing and mortgage market, as well as a new pensions bill, which have been warmly received by UK financial institutions.
The UK government has pledged to provide affordable housing and has set an annual target for 2016 to build 240,000 houses a year. In addition, the government has confirmed that it will seek to create a new regime for ‘covered bonds,’ which will help mortgage lenders finance more affordable 20- to 25-year fixed-rate mortgages.
According to the Guardian, chancellor of the exchequer Alistair Darling revealed that the government expects to launch a number of initiatives to ensure that lenders will have the best possible access to capital market finances, and that consumers will be able to make the most informed decision when taking out a mortgage.
The mortgage initiative has been welcomed by institutions such as the Council of Mortgage Lenders (CML). CML senior policy adviser Rob Thomas said: Innovations in mortgage funding are a key driver for new types of mortgages, so the treasury is right to examine this area closely. But the issue is just as much about the consumer appetite for long-term fixed rates as about how they are funded.
It is too early to say whether these announcements will create a significant shift in the design of the mortgage products of the future, but we welcome the government’s willingness to look at the funding side and we also welcome the renewed focus on increased housing supply, Mr Thomas continued.
The government also revealed a new pensions bill, which will ensure that, for the first time, not just some but all working people have the right to a workplace pension with a duty on every employer to contribute towards it.
Commenting on the pensions bill, Peter Vicary-Smith, chief executive of consumer watchdog Which?, said: It is very encouraging to see a commitment to a long-term solution to the pension crisis from Gordon Brown’s government. A low-cost, consumer-focused personal accounts scheme will enable hundreds of thousands of people who wouldn’t previously have had access to long-term savings to feel more secure in their retirement. We will continue to keep a close eye on the further development of the pensions bill and push for consumer interests to be at its heart.