Societies have been allowed to advance only up to pounds 10,000 not backed by property. This is rising to pounds 25,000 per person - if payments have been kept up - freeing societies to offer schemes to let borrowers transfer debts to a new home. They can now also transfer a home loan to a new property without losing mortgage interest relief.
Anthony Nelson, Economic Secretary to the Treasury, said the changes, which will be in operation in a few weeks, should be a 'useful stimulus' to the housing market - a view not shared by other property market watchers.
Mark Boleat, director general of the Council of Mortgage Lenders, said: 'It's helpful, but it's not earth shattering.' John Wriglesworth, a housing analyst with UBS Phillips & Drew, estimates 1.5 million borrowers are in the debt trap. 'Given continuing falling house prices for every borrower who may be helped by this scheme, there will be thousands more drawn into the trap.'
Average negative equity is pounds 6,000.Reuse content