Ministers to urge easier home loans for young buyers

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The Independent Online
THE building societies will be urged to ease their rules for first- time buyers as part of a campaign by John Major to restore credibility to the Conservative belief in home ownership and revive his domestic policy agenda.

Action on housing is one of the policy initiatives to be agreed at a seminar which the Prime Minister is holding with the Number Ten policy unit on Monday at Chequers. Ministers are planning to urge the lenders to ease their rules to allow young buyers to have 95 per cent loans on homes.

'Sir George Young (the housing minister) is extending the private rented initiatives, but there is quite a strong wish on the part of senior ministers to restore the importance of home ownership as well. We don't think its day has gone because it has gone through a nasty period,' a Government source said.

'The building societies expect people to have deposits of 10 or 15 per cent but a lot of people don't have pounds 5,000 or pounds 10,000 to put down. Unfortunately, the lenders who didn't see the risk at the top of the market see far too much at the bottom.'

The Prime Minister has summoned his policy advisers to the meeting, to refocus the Government on a domestic agenda based on the principles of ownership, opportunity and quality of public services. Mr Major will also hold a meeting with Sir Norman Fowler, the Conservative Party chairman, at Chequers on Sunday.

Ministers believe the seminar is well-timed, following the six- month British presidency of the EC, which some blame for many of the Government's recent difficulties.

Mr Major is planning to follow it with a series of meetings with Cabinet colleagues to ginger up action on a range of issues including law and order, privatisation, capital schemes, and industry.

Two further seminars are planned on the Citizen's Charter and deregulation, to improve public services and answer criticism about the privatisation of public monopolies.

Ministers are planning to coordinate speeches in a campaign to demonstrate that the Government has not been blown off course by Black Wednesday when sterling was forced out of the European exchange rate mechanism. 'There will be a restatement of principles that we believe in - choice, ownership, prosperity and wealth creation,' the source said.

Labour yesterday demanded a charter for householders which would set deadlines for mortgage lenders to pass on interest rate cuts. Nigel Griffiths, its consumer spokesman, demanded action against lenders who took up to three months to cut their rates.

He said that the Bank of Scotland passed on rate cuts to its lenders within four weeks, proving it could be done. The Chancellor of the Exchequer, Norman Lamont, should bring in a charter that would penalise lenders who failed to meet deadlines. 'This should be an immediate priority . . . giving people redress where mortgage lenders drag their feet.'