The housing market is often seen as a thermometer for financial recovery. When a country is coming out the back of an economic recession, it’s understandable that this is where the government usually place their focus.
Over the last few months it has become clear that this is what the UK government and banks want to do. Back in August of last year, the government announced their ‘funding for lending’ scheme that was designed to help the banks and building societies to pass on affordable loans to those wanting to get on the property ladder.
Housing market showing signs of recovery
By all available accounts, this step has had the desired effect. First time buyers and those buying to let are all taking advantage of these mortgage offers and, as a result, the housing market is showing small signs of recovery.
Though there is cause for some positivity, there is still a long way to go. Though it is clear that the availability of mortgages is increasing, local councils believe that they need to go one step further.
Councils across the country are taking the matter into their own hands in an attempt to get the property market moving in their area. Manchester was the first to offer its residents some financial support. It’s been named the ‘Manchester Mortgage’ and involves the local council underwriting 20% of the house buyer’s mortgage.
This type of lending support is something that’s been used throughout the world for a while now. For example, Germany operates a regional banking system where public banks are owned and managed by individual states and districts. This means that the financial support and incentives are far more locally focused.
This type of ‘local’ lending support is something that most of us will have never seen. What it shows is that local councils are concerned about the slow housing market holding back the economic recovery on a local level, and that they are willing to do something about it.