Asset Backed Guarantees Not Working

The Asset Backed Guarantee Scheme introduced by the government to stimulate the housing market and wider economy appears not to having the impact that was expected according to a number of MPs.

The Independent newspaper reported that despite the launch of the scheme in April, none of the major banks in the UK have yet issued a security with a guarantee.  The Crosby Review which was commissioned by the treasury recommended the Asset Based Guarantee Scheme last year. 

A report from the Communities and Local Government Select Committee confirmed the scheme is "a leap that reaches across only half the chasm: impressive, but doomed to fail. If we are to meet housebuilding targets, then ministers and senior officials must maintain pressure on the Treasury to bring forward new measures to get the mortgage markets moving."

Labours, Phyllis Starkey, committe chairman added: "House-builders simply will not build homes which they cannot sell."

With house price indicators and reports showing mixed messages in recent months, the only thing that seems clear is that the situation is very unclear.