An additional £14 billion in mortgage lending over the next two years by the nationalised Northern Rock bank is expected to be announced today.

It is understood the bank will make an extra £5 billion in loans this year with a further £9bn in 2010.

The move follows Chancellor Alistair Darling’s decision last month to reverse the rapid wind down of the bank’s loan book.

Ministers are increasingly anxious to see the flow of credit restored to home-buyers and businesses amid continuing reluctance by the banks to lend as they rebuild their balance sheets.

Northern Rock is well ahead of schedule on its repayment of the money it borrowed from the Government, with £9bn outstanding at the end of December compared to £27bn a year earlier.

Meanwhile, Gordon Brown last night issued a warning to banks in Britain and around the world that they must end risky speculation and resume their traditional role as “stewards” of people’s money.

The Prime Minister was among eight European leaders meeting in Berlin who agreed on proposals to overhaul the global financial system, bringing hedge funds and other elements of the “shadow banking system” under international supervision.

“We have got to show together that we can restructure the banking system around sound banking principles that deliver the integrity and the trust and the openness and transparency that is essential for people to once again trust the banks,” he told the closing news conference.

“We are are looking at how, working with all continents, we can ensure the best means by which the banking system can serve the public — stewards of people’s money rather than speculators with people’s money.”

Earlier, however, Mr Brown targeted his comments directly at Britain’s high street lenders, calling for a return to “traditional” banking practices and “prudent” lending.

Mr Brown and Chancellor Alistair Darling were returning to London last night to be briefed on talks which took place over the weekend between the Treasury and UK banks on the Government’s asset-protection scheme.

The plan, which is expected to be finalised this week, will see the taxpayer underwrite the so-called “toxic” assets held by the banks in an effort to get the flow of credit going again.

Mr Brown called on the banks to resume lending to first-time home-buyers on modest incomes who had not been able to build up large deposits.

At the same time, however, he said he had instructed the Financial Services Authority to curb the issuing of 100%-plus mortgages which plunged many borrowers into trouble when the housing market crashed.

“We do want to see the reinvention of the traditional savings and mortgage bank in Britain, for loans to be made on prudent and careful terms, not just to people with large deposits, but to those on middle and modest incomes who wish to buy their home but who have not been able to save a huge deposit,” the PM said. “We have got to get the balance right between serving home owners better and encouraging responsibility in the housing market.”

Shadow treasury chief secretary Philip Hammond said the Government was acting too late.

“Gordon Brown is trying to shut the stable door on irresponsible lending long after the horse has bolted,” he said.

Source: http://www.propertynews.com//blog/807/

Sell A House Fast Quick House Sale UK Real Estate Residential Sales Commercial Property