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Property market set to receive substantial backing from government

The UK property market is set to receive a serious injection of liquidity from the UK government who are looking to ensure banks against losses on potential toxic mortgage loans. As we have seen in the US, a number of sub-prime customers are in serious financial difficulty and this is only just now starting to filter through to bank balance sheets. While a figure of £200 billion has been mentioned we await details as to how this will be targeted at certain types of loans and financial instruments.

The UK banking sector is in a very precarious situation having initially ignored the UK consumer and UK business population despite promising to increase liquidity when the first dose of taxpayer financed was introduced to the market place. Now they have been forced to go back to the government cap in hand and expecting UK taxpayers once again to shell out billions upon billions of pounds.

It is hoped that the UK government will this time be able to pin down details of terms and conditions which the banks need to adhere to in order to protect their rescue package. How difficult this will be remains to be seen but the credibility of the current government rests on the shoulders of Gordon Brown.

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