The credit crunch is hitting many homeowners both here and in the United States. Many have called for the government here in the United Kingdom to provide some sort of relief directly to homeowners rather than ploughing money into the banks.
As many fear that their home will be repossessed and housing charities such as Shelter warn that they could be seeing an increase in homelessness among the middle classes and young families, some kind of solution is desperately needed.
So far the government has poured over £50 billion into the banking market, hoping that some of that will trickle down to consumers. Unfortunately many homeowners are at a high risk now and cannot await the trickle down effect which the government is hoping for.
Many banks are not even offering the better rates which the monetary input should have enabled them to offer to their customers, meaning that the government money is doing little to help the average person affected by the credit crunch.
However there is hope on the horizon as the United States announces that they are devising a government supported scheme to lend to homeowners at low rates.
The loans will offer borrowers struggling to manage their debts, who would usually find it hard to secure credit, especially at good rates, the opportunity to pay off expensive debts and borrow against their home from the government at a better rate.
The Federal Deposit Corp (FDIC) is proposing to allow the Treasury department to lend homeowner loans to almost 1 million Americans. The proposed loans would let borrowers pay off up to 20% owing on their mortgages.
Borrowers would then not be required to make any repayments in the government issued loans for the next five years. The FDIC is estimated to require around $50 (£25 billion) billion in order to offer the proposed loans.
If this proposal goes through in the United States it could mean that a similar initiative may be attempted here by the British government. The United States was the first country hit by the credit crunch, the effects of which then hit us here in the United Kingdom and are now beginning to affect many European countries as well.
Despite the many differences between our two countries, it has become evident that our economies are closely linked and any plan which provides relief and is successful in the United States is likely to be adopted here.
Especially as fears of homelessness have been voiced, the government will be keen to avoid a situation where the demand on the council housing system becomes even greater than it is already.
If the homeowner loans plan is approved and executed in the United States, experts are agreed that a similar thing will happen here. Indeed many are suggesting that it is necessary for the government to step in now, regardless of the success and popularity of the proposals in the United States.
Related Articles
Home Loans - A Basic Introduction
By: Joseph Kenny | 24/11/2005 | Finance
The most popular method of financing a home purchase is with a mortgage. This is a loan that is secured over the home.
Getting Bank Loans when you are Self Employed
By: Joseph Kenny | 25/01/2006 | Finance
There was a time when being self-employed meant that you would have a very hard time ever getting any credit from a bank. This was pretty much accepted as one of the downsides to self-employment
Personal Loan Basics - Finding a Great Deal
By: Joseph Kenny | 01/03/2008 | Credit
Personal loans are those loans which a borrower applies for personal purpose. The loan may be for home improvement , car purchase , educational purpose, holiday trips etc. In USA, a personal loans can be arranged from host of lenders available in the website in addition to Banks who offer in various form
UK Secured Loans - The Right Choice For You?
By: Joseph Kenny | 28/08/2006 | Advice
It's not always easy to get a loan, especially if you have a poor credit rating. County Court Judgements (CCJs), defaults and late payments can blight your credit history, making it almost impossible to get an unsecured loan.
Banks Far Too Slow to Increase Credit Interest Rates
By: Abbi Rouse | 17/06/2008 | Finance
Despite recent price wars in the credit interest rates offered by banks, too many are still offering low incentives for those who keep their accounts in credit, a new report has asserted.
Banks Are Too Slow To Raise Credit Interest Rates
By: Abbi Rouse | 20/06/2008 | Credit
Despite recent competition in the credit interest rates offered by banks, far too many appear to be still offering incentives for customers that keep their accounts in credit, a new report has stated.
How To Deal With Rising Interest Rates
By: Joseph Kenny | 15/04/2006 | Finance
For the past few years, interest rates have been quite low, causing many people to borrow large amounts of money for a variety of different expenses.
By: | 31/12/1969 |
Got a Question? Ask.
Ask the community a question about this article:
Q&A Powered by:
Finance 
