this has been looming on the horizon for the last 10 years ,house prices have to return to a realistic level,estimates that houses in the UK are 40% over valued are true in my opinion.
125% mortgages are not realistic and they have been spun to death by every financial house in the country.estate agents are the main cause of overpriced houses fueled by greed.nuff said

lloyd fairweather, Norwich, Norfolk

Well said Paul of Coventry.

There are enormous dangers here and of course there is a cost to the taxpayer. At the very least, any purchaser of UK Government gilts will be requiring an extra interest risk premium for the perceived deterioration in the Government's credit rating.

I suspect that the damage inflicted on the banks is far worse than we have been led to believe. The situation continues to worsen in America with REO (properties being taken back by the banks) remaining unsold in ever increasing numbers and banks failing to provide adequately for their losses, both on Mortgage Backed Assets and other loans. To think this will not continue to impact the UK is naive.

What we are not being told is how much these MBA's being handed over to the Bank of England would fetch in the current market. Substantially less than 100% of their nominal value I would bet.

Carl, Cyprus,

Isn't this effectively shifting the £1.4 trillion worth of debt ,well OK £50 billion of it for starters onto the Nation Debt.There already talk of this increasing to £100 billion and it could easily increse to £500 billion.Isn't the pound going to fall like the dollar and push up inflation?

stephen hulton, eure, france

"Lenders are also cherry-picking the best customers and refusing to lend to those who do not have large deposits, making it nearly impossible for first-time buyers to get on the property ladder. This is causing downward pressure on house prices" (the Times)

- which should help those without big deposits get on the property ladder!!! House prices are TOO HIGH, they need to go down to avert disaster. when will the government (MR BROWN) face reality and stop trying to shore up a house of cards by printing money. The alternative is Zimbabwe Mugabe type inflation and economic chaos.

I N O Beta, Outer Timboktu

Brett, London,

For anyone with any doubt left, the Bank of England's action has made clear that it is independent only when it suits the UK Government. Mervyn King's comments at the time of the Northern Rock debacle showed that he considered it would set a very damaging precedent if commercial banks loans were taken on by the Bank; yet that is what has now happened. What we have seen is a massive gamble with taxpayers' money aimed at trying to save Gordon Brown's hide. A black day indeed.

Paul Wheeler, Taunton, England

The banking system started long before Brown and King were around. This is the latest sage in a depressing story of greed and power. Control of the money supply is everything to the major bankers.

King and Brown can either attempt to keep the bubble going or end it all and start with another system that does not include usery. This requires a level of ingenuity and courage that neither of them posess and nor do the other leading politicians.

Alan Heaton, Frankfurt, Germany

It's the last line that bothers me the most.

"The Treasury has admitted that it cannot force lenders to use the money to the benefit of customers".

They have already set that precedent by not passing on rate cuts but trousering the loot.

Lets face it, why have a cash call such as the RBS one when you can just be given it as a lovely present. Doubles all round in the boardrooms.

Robin, Crawley, UK

I thought the country was already too much in debt. This measure is simply going to exacerbate the problem by £50 - 100 billion and put the inevitable crunch a year or two down the road.

John Thorpe, Milan, Italy

It sounds like a reasonable step. Its an attempt to do something, even if it only helps soften a house price fall then it would have been worthwhile.

John, WGC,

The self-serving intentions of this government is unbelievable! This is an attempt to prop up an over-inflated housing market just so it looks like they are good with the economy - 'look how well off you all are, your houses are worth X amount more than 10 years ago'.
What they are forgetting is that FTB's can't get on the market, we're all saddled with unbelievable amounts of debt - just to keep up with the market. There needs to be a correction for the stability of the market long term.
I hope that people avoid the housing market like the plague and prices come down to a reasonable level (such as 4 or 5x earnings). Anyone buying now needs their head examined!

Caz, Blackpool, UK

A necessary move - that contravenes EU competition law! We have undertaken to treat ALL EU banks and building societies equally - which would require many times that £50B. The other ways to bring it inside the rules are by cherry-picking the mortgages, accepting only those secured by a property worth considerably more than the sum currently owing, or at a very significant discount; either is a recipe for bank bankruptcies and disaster.

Sad as it surely is, the least-bad option may be to blunder on as we're doing - under a new Chancellor and BoE Governor!

Noel Falconer MEcon, Couiza, France

I still don't get it. The banks use depositors money for mortgages, they then borrow more money of ????? (leverage) using the mortgages as collateral. They keep repeating the process (pyramid selling) until the bubble bursts. If they had a plan, it was to be holding the money when the bubble burst. Surely they were simply snake oil salesmen in suits with big cars and big cigars. They should be facing the fraud squad and asset seizure not cosy meetings with the BOE.

sid, dery,

Much of the problem in the UK for first time borrowers is that they do not focus on getting a deposit early enough. They focus on buying a new car, designer clothes, clubbing/drinking, LCD's etc etc. They are more likely to drive up a visa bill as opposed to savings. Then when they want on the property ladder, they moan about not having a deposit. Almost everybody needs to make sacrifices or work harder to get on the property ladder. If you cant buy in the location you want then you move to the next place that is cheaper and then you move up. I remember 30 years ago my father struggled with his £8,000 mortgage, it doesn't mean it was easy for him, it just was and is the way it is. I firmly believe that if you really want something and you focus and work hard then you can have it, but you have to be motivated to achieve it!

Graeme, London,

What ever happened to the government backing savings in these banks. In Northern Rocks case the savers were lucky. When are we going to see an increase from GBP 35,000 to something more realistic with the some guarantee from the government put in place? Savers would be more likely to invest more in one bank rather than dividing their money in several different banks/building societies. I don't understand why this important issue has not been addressed. Savers also need reassurance and trust in the banking system.

Joan, London

Joan, London,

The Bank of England would never propose such a political solution to a fiscal problem. This is another example of the tissue thin disguise of BoE 'independance' being stripped away.
Brown still runs the Bank same as he always did.

andy, london,

Obviously this is just a joke, so where can the punchline be?

It's in the last paragraph..... "The Treasury has admitted that it cannot force lenders to use the money to the benefit of customers. "

Very amusing, but sadly they aren't joking.

Robin, Crawley, UK

Cheapest way to affordable housing and to get first time buyers on the ladder is more realisitic(lower) house prices. Wage growth to RPI is negative, ie every month people get poorer relative to the cost of living.
Personally I don't see the sell off being too great for the next couple of years, flat maybe enough to avoid speculators and thus allow people to think of houses as just a place to live, not an investment, in the same way nearly every other country outside UK influence does.

Jim, London, UK

This plan may have the effect of bringing down peoples' mortgage payments, but is unlikely to encourage banks to soften their lending criteria. That means first time buyers having to save thousands more for deposits at a time when everything else is becoming more expensive.
Without the investors buying into the market either, I'm afraid that prices will continue to fall.

Andy Mansion, Cheltenham,

This will not kick start lending. Do you think that banks like RBS, after their rights issue, will be happy to start lending as before? There may be some spike in liquidity, but fundamentally the UK housing market has been found out for the bubble it is. This wasn't caused by US sub-prime, or any other "global" factor, it is the fault of New Labour and the central bank.

Paul, London,

This measure is a very well meant measure and represents a serious attempt to stabilise the system. I could not tell you it will work and I don't think anyone knows. What I do know is if the banks seize or worst, becoming insolvent with no way out - then the country will be in a desperate state,the like of which has never been. Shame is it not, that this is the first good idea that this government has had regarding the economy Lets hope it does not have the same qualities as if the Captain of the Titanic were to be seen rushing below and putting his finger in the gash! There is agreat deal of individual suffering to comeand upset and pray that many are spared .

ChrisStuart, Carantan, France

A Party running scared led by a Leader who has been found out.

The swindlers saloon.

ed, frankfurt,

'The taxpayer is bearing a risk'. Indeed.

'If house prices fall sharply', should read *when* prices fall sharply 'the mortgage-backed assets will fall in value'.

This is embezzlement on a grand scale, all to bail out some bankrupt banks and try to reflate an unsustainable asset bubble until after the next general election.

Paul, Coventry,

Poor first time buyers - likely to see strong house price inflation, putting that first home even further out of reach.

Unbelievable from a socialist government but expected by an unelected PM desparate to save his skin.

Robert Mugabe would be proud.

Gareth Jones, Dusseldorf, Germany