Council mortgages 'will be considered on commercial terms'

Date:Thursday 5th February 2009
Author: Rachel Fletcher

People attempting to get council mortgages will be considered on the basis of commercial interests, according to the think-tank responsible for the scheme.

James Hulme of the New Local Government Network said that the system, which enables local authorities to provide home loans to people, will involve lending only to people who are secure investments.

"We are absolutely clear that councils should treat every proposal as a commercial bank would," he said, adding: "This is not just throwing money at the problem and at people who would not ordinarily get mortgages."

With the Department for Communities and Local Government having cut the rate for council lending, councils in places including Manchester, Hackney, Bristol and Portsmouth may be able to go ahead with mortgage lending.

Recently published figures from the Council of Mortgage Lenders found that interest payments on mortgages took up an average of 18.2 per cent of a first-time buyer's income in November, the lowest since February 2007.