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Mortgage liquidity schemes welcomed with caution

Government proposals to promote the creation of a 'gold standard' for UK mortgages have been given a cautious reception.

In his first Budget speech on Wednesday, chancellor Alistair Darling made official plans to set up a working group to focus on provision of housing finance to increase the availability of long-term mortgages.

It is hoped long-term mortgages of ten, 15 and 25-years could protect homeowners from the risk of fluctuating markets.

Abbey has welcomed the government's plans, saying it would be pleased to offer its "thoughts and insights" in consultation.

However a spokesperson for the firm also raised concerns about kite-marking, saying that it would "inevitably" lead to a two-tier system of mortgage market in future.

"Customers that did not make the gold grade [that is, people who were perceived as riskier or without large deposits] may not be able to find good mortgage deals," the spokesperson said.

"In addition, the system would be almost impossible to enforce as there is no obvious independent party who could rate the mortgages who is prepared to carry a guarantee for them."

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