key packages to help home buyers and repossession families..

HOMEBUY DIRECT

• How it works: First-time buyers whose household income is under £60,000 are entitled to an equity loan for up to 30 per cent of the price of a new-build property. It will be interest free for five years but a fee may be payable at the end. Cofunded by Government and developer.

AFFORDABLE HOUSING

•How it works: Local authorities will apply for grants to build more social housing over the next 18 months

MORTGAGE RESCUE

•  How it works: Option A  -  Shared Ownership. Housing association buys share of property if owner cannot meet mortgage payments.

Owner pays rent on this portion, but their total bill is lower. When property is sold, housing association receives its share

Option B - Shared Equity. Housing association lends cash to owner to help pay mortgage; homeowner pays this back at low interest rate

Option C  -  Sale and Rent Back. Housing association pays off entire mortgage and rents back the property at an affordable rate.

Homeowner is now permanent tenant

IMPROVED INCOME SUPPORT FOR MORTGAGE INTEREST

•  How it works: From April 2009, the Government will pay the interest on a mortgage of up to £175,000, 13 weeks after a homeowner loses their job.

Currently the wait is 39 weeks. To get ISMI, a homeowner must be receiving one of three benefits - income support, Jobseeker's Allowance or pension credit and have less than £16,000 in savings.

Alistair Darling wants local authorities to take on families who have been refused a loan by commercial lenders.

The measure could help first-time buyers who struggle to raise the big deposits demanded by banks and building societies.

Town hall chiefs in London are drawing up proposals to offer mortgages to thousands of families struggling to buy a home.

They are urging Chancellor Alistair Darling to relax borrowing rules so councils can offer loans to home buyers.

Local authority bosses in the capital are looking at a safety net scheme to avoid repossessions.

They would take over the mortgage, or part of it, of people falling into arrears and then rent back the property.

In London, the number of court orders rose by 12% to 4,052, according to non-seasonally adjusted data.

There were large increases at several county courts including Edmonton, 34% to 395, Kingston-upon-Thames, 22 per cent to 93, and Brentford, 20 per cent to 191. 'The level of growth of repossession orders suggests that we are on track for a repossession-crisis very similar to the early Nineties,' said Liberal Democrat Treasury spokesman Vince Cable.

Demand for rented accommodation in July grew by 76 per cent year-on-year, according to new data from estate agent Your Move.

HOUSE repossessions across the UK were up 48 PER CENT in the fast half of the year – the highest level for 12 years, figures showed today.

A total of 18,900 homes were taken back by lenders after their owners failed to keep up with mortgage repayments – the equivalent of 0.16 per cent of all mortgages, the Council of Mortgage Lenders said.

The CML forecasts that 45,000 homes will be repossessed by the end of the year as cash-strapped borrowers struggle to repay their mortgages.

The total number of households with mortgage arrears of three months or more was 155,600 at the end of the first half, up from 120,800 in the same period last year.

Adam Sampson, Shelter's chief executive, said: "With current fears that unemployment is set to grow, there is no doubt we are inching ever closer to the dark days of the last repossession crisis.

"We know that behind these figures are thousands of families facing sleepless nights worrying about how to make their next mortgage payment, and many thousands more will be waking up to the frightening reality of repossession.

"Government urgently needs to step in to prevent thousands more families from losing their homes and provide the significant financial support troubled homeowners need to keep a roof over their head."

Earlier this week, the Financial Service Authority said some lenders had been too quick to take action against struggling borrowers and called on them to treat repossession only as a last resort.

Coogan said lenders would work with the FSA to ensure borrowers were treated fairly. "No-one wants to see a household lose their home, and repossession typically leads to a loss for the lender as well.

"The focus of lenders' arrears management policies today is on seeking realistic alternatives that balance the interests of customer and lender.

Sue Edwards, head of consumer policy at Citizens Advice, said: 'We are continuing to see high numbers of people coming to see us with mortgage and secured loan arrears.

'Yet in too many cases, lenders are still not doing everything they can to help borrowers in trouble, piling on extra charges, not negotiating with borrowers to come to a workable solution over repayment arrangements and using court action as a first rather than a last resort.'

For families who lose their homes, the consequences are heart-breaking, with many parents saying they feel like complete failures.

The downturn, combined with slowing car sales and the biggest slump in high-street takings for 25 years, had raised hopes that the gurus on the Bank's Monetary Policy Committee might cut the cost of borrowing.

Their decision to freeze rates at five per cent was heavily influenced by the spiralling cost of living. Inflation is at a 16-year high of 3.8 per cent - almost twice the government's two per cent target - and widely expected to hit five per cent later this year.

But the Bank's decision sparked fierce criticism from union leaders and those with a vested interest in the property market.

Royal Bank of Scotland has reported losses of £692 million for the first half of 2008.

The group reported statutory pre-tax losses of £692 million for the six months to June 30 - which compares with profits of £5 billion the previous year. Underlying profit fell 3 per cent to £5.1 billion.

Management was seeing "some increased strains" particularly among small business clients, it added, but has been offset by reductions in losses among personal unsecured debts thanks to a "conservative approach" to this sector in recent years.

Caroline Flint, the housing minister, argued that people's experiences now were nowhere near as bad as those in the last recession in the early 1990s.

"In the 1990s the problems people faced were high unemployment and high interest rates," she said.

The fact of the matter is that too many people have paid for their houses at unreasonable prices. If people had stopped buying when the national average house price had risen to greater than four times the national average wage then no one would be now facing repossessions. People can blame the banks, high energy prices, or acts of god but at the end of it all we each have our own responsibility to spend within our means and not beyond them.

Posted By :Nick Ashwell

Chancellor Alistair Darling is believed to be looking at a number of measures to restore confidence in the UK’s stalling property market, including reforming the payment of stamp duty.

Options include a stamp duty holiday for all buyers, scrapping the tax for first time buyers or allowing purchasers to defer the payment of stamp duty. The idea of tax-free savings accounts for first-time buyers has also been mooted.

Details of the chancellor’s plans will be presented to Gordon Brown at the end of August. 

Whatever the government decides, Mark Wallace, campaign director at TaxPayeyers Alliance, believes urgent action is needed. “The government can’t hedge their bets and not follow through what they’ve started,” says Wallace. “After the u-turn on home information packs, the 10p tax rate and proposed fuel duty hike this autumn we’ve almost come to accept that the government will change its mind. Gordon Brown and Alistair Darling need to acknowledge the financial pain many families are suffering and do something meaningful about it.”