Launch of Mortgage Review group

The Treasury has appointed former HBOS chief executive, Sir James Crosby, to head a review of the UK mortgage market.

The move is aimed at restoring confidence in the home loan sector and providing practical solutions to assist banks and other lenders unable to fully fund their lending, as the credit crisis continues.

Sir James, who is currently deputy chairman of the Financial Services Authority, will be recruiting members of the mortgage and investment industries to join the review group.

Yesterday, Chancellor of the Exchequer, Alistair Darling, attempted to reassure homeowners.

Speaking on BBC Radio 4’s Today programme, Mr Darling expressed the view that the housing market slowdown would not turn into a crash, pointing out that UK employment levels and the overall economy remain strong.

However, the International Monetary Fund published its World Economic Outlook report this week, predicting that UK growth would slow to 1.6% during 2008 and 2009.

In last month’s budget speech, the Chancellor forecast growth at 2% this year; 1.6% would represent a 15 year low for UK economic growth.

With regard to the housing market, the IMF report asserts that UK property prices are 30% overvalued.

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