Experts believe that if the government manages to stimulate mortgage lending and raise the rate of loan issuance from the current 32,000 to 50,000 loans per year, then the decline in housing prices by 2010 will be only 16%. However, if the measures taken by the government prove insufficient, then the decline in housing prices by the first quarter of 2010 will be 40% relative to the peak level. In the worst case, price stabilization in the market will begin no earlier than 2012, and until 2013, the cost of British housing will not exceed the 2003 level.
At the same time, the government's measures to revive the mortgage market have already yielded results. According to official statistics from the Bank of England, in December 2008 the number of mortgages issued increased to 31,000 (from 27,000 recorded in November).
In December 2008, the UK government announced the launch of the HomeBuy Direct program. The program is aimed at supporting first-time homebuyers - they will receive an interest-free loan from the state to pay 30% of the cost of the purchased property. The loan recipient will only have to start repaying it five years after the transaction is completed. 400 million pounds sterling (about $600 million) were allocated for the implementation of the program.
Nevertheless, the problem of high interest rates on loans for purchasing property remains unresolved in the country. Today, banks only issue loans to very wealthy individuals who already have the necessary deposit in the bank. Due to stricter requirements for potential borrowers, by October 2008 the minimum bank deposit for buying a home had risen to £21,198 ($41,397). For comparison, in October 2007, first-time homebuyers in Britain needed to have £11,791 ($17,302) on hand.
In addition, reports Lenta.ru, the UK government has begun providing state guarantees for the securitization of mortgage loans.