Mortgages Uncovered

Barclays bank will be the first lender to make use of the new government £250 billion guarantee. Barclays plans to raise up to £1 billion via sales of three-year notes this is the new move which mortgage brokers and the government are hoping will help to kick-start the market.

The hope is that if UK banks are successful through raising money in a cheaper ways such as through the government bond scheme then they will be able to pass over savings to home-owners and would be home buyers so the property market because buoyant again.

Not much has been seen so far from the Bank of England’s emergency 0.5% interest cut which was over two weeks ago because all that has happened is that many banks have withdrawn their tracker products rather than choose to pass on the fall in interest rates.

Once again last week, Nationwide the UK’s biggest building society raised the interest rates on its tracker mortgages.

Last week, Barclays announced it was beginning issuing the 3-year notes in order to raise at least £1 billion – this will come with a government guarantee and will serve to encourage more investors to lend higher sums of money to the bank. This is all part of Barclay’s larger plan to raise a £400 billion bailout and the Government has said it would guarantee the senior unsecured debt instruments issued by Britain’s banks.