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Darling proposes home loans 'kitemarks'

A new government-imposed mortgage grading system could be introduced, a report in the Financial Times suggests.

The new 'kitemarks' will be applied to some home loans as a mark of quality - making it easier for consumers to easily pick and choose a product.

Confidence in loans has taken a knock in the wake of the credit crunch, with mortgage lenders have tightening their criteria and withdrawing cheap credit.

However, some banks warned that the introduction of the 'gold standard' grading might lead to a two tier home loans market in future.

Angela Knight at the British Bankers' Association said that there was a "risk in stigmatising" mortgages not branded with the kitemark.

However, she added that there was "merit" in the proposal.

Encouraging consumers to spend more on loans might help to alleviate the effects of the credit crunch by improving cash flow into banks.

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