The New Local Government Network (NLGN) has proposed that local authorities should adopt US style ‘mortgage support plans’ and offer below market rate, whole or partial mortgages to either stave off repossession and eviction, prop up the housing market to prevent remortgage difficulties, or support first-time buyers to buy locally.

Under the scheme, councils would be able to borrow money under prudential borrowing rules and offer support to a select group of people, such as first-time buyers or people involved having problems making their repayments, particularly when numbers of mortgage defaults might impact disproportionately on social housing demand in the area.

Anthony Brand, the author of the report, said: “Prudential borrowing would support lower-interest debt than the markets can support. With mortgage defaults up 17% this year, and likely to top 100,000, supporting those areas hit hardest could be vital to sustaining communities.

“Government should set £2bn of its £50bn intervention package aside for supporting these measures, and allowing the hardest hit councils to apply for funding. This could help up to 15,000 people out of difficulty and even provide a long-term profit to the Treasury.”

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