Northumberland County Council to become mortgage provider
Jan 29 2010 by David Black, The Journal
A COUNCIL facing serious financial problems is considering providing mortgages for people struggling to get a home loan because of the credit crunch.
Cash-strapped Northumberland County Council – which is having to make budget cuts of up to £50m over two years – is thinking of using its capital resources to help would-be home buyers who are being frustrated by the continued squeeze on lending. A report is being prepared for the Liberal Democrat executive in March on the possibility of the authority giving mortgages “in certain circumstances” to applicants unable to secure a loan from commercial lenders.
The proposed scheme would target low-cost home ownership for people in rural villages, new energy-efficient homes – where reduced energy bills would help owners meet mortgage repayments – and new-build schemes in regeneration areas.
It aims to address the current situation where commercial lenders are typically offering only 70/80% mortgages, and are not lending on certain types of property, such as low-cost homes where restrictions on sales make them less attractive.
It also seeks to tackle the problem of “unaffordable” mortgage repayments caused by lenders’ higher interest rates on higher value loans.
The council is considering filling this gap by offering maximum loans of 90% to people who would, under normal circumstances, be accepted by a bank or building society, and who can show they are financially able to make the repayments.
