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The average price of a new home fell for a third consecutive month in August 2008, taking new home prices to just over £243,000

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The US House of Representatives voted against the $700bn rescue plan that was set to save the US from recession. George Bush’s Republican Party senators mainly voted NO to the bail out proposals.

The proposal to extract toxic debts away from the banking system was struck down by 23 votes with 228 NO votes to 205 yes votes in the Congressional house last night.Despite  money market falls worldwide and the greatest one day drop in the history of the Dow Jones share indexes ( 7%)  in the UK and France the markets were alive and kicking.

Early morning trading on the FTSE 100 is up by 0.74%, following a fall of 3% yesterday. France’s Cac 40 index is also showing a tentative rise of 0.06%.

Banking shares in the UK were hard hit yesterday, with HBOS down 12%, Royal Bank of Scotland down 11% and Lloyds TSB seeing a drop of 9%.

President George Bush is due to make a speech in response to the failure of the bill later today and lets hope for all concerned he can change some minds any rally his troops to get the bill passed as soon as possible.

But Congress will not return to session until Thursday following Rosh Hashana, the celebration of Jewish New Year.

The shadow chancellor, today announced that the taxpayer could lose out from the government’s decision to nationalise Bradford & Bingley.

He said it was not at all  fair that people on low incomes should see their taxes spent to support people who have been taking home seven-figure bonuses.

Instead of being nationalised, Bradford & Bingley should be placed in a special resolution regime under which the Bank of England would take charge of the process of running the business down without the taxpayer taking a hit, Osborne said.

Osborne told GMTV: “I don’t think, in the end, that the taxpayer should pick up the bill that really should be borne by the City.

“What is really being saved here are not the depositors or the jobs - it is the large institutions that lent lots of money to Bradford & Bingley and made money out of that when times were good and now that times have turned down are asking every single person in the country to pay more in their taxes to bail out this bank.”

He added: “There are people who lent these banks very large sums of money in the good years - banks like Bradford & Bingley and Northern Rock. That’s how they grew so quickly and were able to offer those cheap deals.

“Under nationalisation, the taxpayer steps in and says, ‘We are going to give you your money back’. I’m not sure that’s fair.

“I don’t think people on £12,000 or £20,000 a year should see their taxes go up in order to support people who are getting bonuses of £1m or £2m a year.

“I think we could put banks like Bradford & Bingley into a special resolution regime where the Bank of England would take charge of it and run the bank down.

“That’s what’s going to happen anyway, but the way the Bank of England would do it would mean it is not the taxpayer who would take the hit; it’s the big institutions that lent Bradford & Bingley very large sums of money.”

The government has said that, under the nationalisation model it is using, the taxpayer would be protected because any losses would be borne by the banking industry under the financial services compensation scheme.

Vincent Cable, the Liberal Democrat Treasury spokesman, said the ideal situation would have been to find a private buyer for Bradford & Bingley but that current deal was the “only other way forward”.

And he predicted that it could even turn out to be a good deal for the taxpayer.

Cable told BBC Radio 4’s Today programme: “The mortgage lending business of Bradford & Bingley doesn’t look good.

“They have got a lot of bad loans, they have got the buy-to-let mortgages, they have got the self-certified mortgage arrangements, but it may that in the long-term, having acquired this for virtually nothing, the government will be able to sell it and perhaps either cover itself of probably even make a profit.

“It could eventually turn out to be a good deal for the taxpayer, and the contrast with the United States where the taxpayer is actually paying to buy up bad loans, here the government’s effectively getting them free and depending on the competence with which they are managed it may prove to be a relatively successful deal for the taxpayer.”

As of this morning Bradford & Bingley has been nationalised by the government.The rescue deal, secured by the Financial Services Authority and the Treasury, will see the Treasury take control of the remaining mortgage and personal loan books, wholesale liabilities and the relevant staff and headquarters.Abbey will take over deposit and saver accounts and B&B retail branches.

The Financial Services Compensation Scheme has paid out around £14bn to ensure the protection of B&B’s retail deposits.

It has paid Abbey £4bn to ensure the safety of the remaining deposits not covered by the FSCS.

The Bank of England has been called in to fund the transfer by the FSCS which will be paid for by the wind up of B&B.

A release says the move was triggered by poor investor and lender confidence, likely sparked by growing speculation around the longevity of the business.

B&B owns Mortgage Express, the nation’s largest buy-to-let lender and last week it announced it would slash 370 jobs connected to mortgage processing and begin a review of head office and central staff.

A spokesman from the Treasury says “The situation is fluid. Talks are ongoing but if a buyer cannot be secured then the government is prepared to act. But a private-sector solution is preferable.”

Three major UK mortgage lenders have hiked their interest rates, signalling an end to the recent trend of falling mortgage rates.

HSBC, Barclays’ lending arm the Woolwich and internet and telephone bank first direct all said they were passing on recent increases in the cost of borrowing to customers.

The move brings to an end recent falling mortgage rates since the credit crunch first struck.

Rates have been steadily reducing since July, helping push the average cost of a two-year fixed-rate mortgage down to its pre-credit crunch level, as lenders once again competed for business. But wholesale funding costs have soared during the past week following the recent financial turmoil across the globe.

Two-year mortgage swap rates, upon which fixed rate deals are based, have increased from 5.18% last week to 5.56% on Thursday.

At the same time the three-month Libor rate, which affects the pricing of tracker mortgages, has soared from a recent low of 5.7% to nearly 6.28% - the highest level since December 2007, and the biggest differential to the Bank of England base rate since September.

Last week specialist lender GE Money, which lends under the First National and iGroup brands, announced rises of up to 1.6%, while smaller lenders, such as Yorkshire Building Society, have also increased the cost of most of their deals.

Now that some of the major mortgage lenders have also increased their rates, other lenders are expected to follow in the next few days.

HSBC is increasing its fixed-rate deals for borrowers with just a 10% deposit by 0.3%. It is also introducing a new loan to value tier of 75% on its fixed rate range, and it is cutting rates on these deals by 0.2%.

The group justified its decision saying that mortgages for lower risk borrowers with larger deposits were cheaper to fund than those for people who did not have as much money to put down.

Fairinvestment.co.uk research has found that it could take first time buyers up to  15 years to save the deposit for their first house.

As lending criteria’s tightens and first time buyers toil to get their foot on the property ladder, Fairinvestment.co.uk research has found that it could take up to 15 years for a first time buyer to save a deposit of 15 per cent.

The Fairinvestment.co.uk survey of more than 2,000 people found that the average amount saved each month is a mear £139, an annual total of £1,668, which will not make much of a dent in the average first time buyer mortgage deposit of 15 per cent of the property price.

The average house price now stands at £174,178 according to the Halifax House Price Index for August 2008, and 15 per cent of this is £26,127. At a rate of £1,668 a year, Fairinvestment.co.uk has worked out that it would take a first time buyer more than 15 years to save the average 15 per cent deposit required for a first time buyer to secure an average priced house, assuming that house prices remain level over the next 15 years.

The research also found that women would take longer to save the amount than men as, on average women save just £121 each month, it could take 18 years to save the amount required, compared to the average male save of £185 which would take just under 12 years. However, if a male and female couple combined their savings they could save the 15 per cent deposit of £26,127 in half the time, just seven years.

Commenting on the results, chartered financial planner at Fairinvestment.co.uk Sharon Bratley said: “The news is shocking but comes as no real surprise considering the state of the housing and mortgage market at the moment. The results just go to show the reality of how first time buyers don’t stand a chance without hefty savings or generous parents.

“A 15 per cent deposit is a realistic expectation for a first time buyer these days, but to save more than £25,000 in practice is not realistic at all. A couple combining savings will be in a better position but it could still take seven years to save the amount needed to secure their first home”.

New research from Moneyfacts.co.uk shows the risk of falling house prices is now a major factor in lenders’ product ranges, with lower LTV mortgages taking up a growing share of the UK mortgage market.

The availability of mortgages available to buyers with a deposit of  under 10%, including 100% plus products, has fallen from 74.2% in September 2007 to just 29.2% this month.

Mortgages for buyers with no deposit have become almost non existant, accounting for just 0.5% of mortgage available in September 2008, compared with 13.4% a year ago.

Darren Cook, mortgage expert at Moneyfacts.co.uk, explains: “Competition was one of the major factors when setting mortgages rates and best buys were awash with deals at 95% LTV. Today the overriding factor when setting mortgage rates is risk.

“Lenders are focusing much more on risk. They are making less products available to borrowers with a small deposit and making the few that are available much more expensive.”

Buyers with larger deposits available are seeing a greater share of product aimed at them, with the number available for those needing between 80% and 85% LTV rising to 20.2% from 12.2%.

Those with a big deposit of 30% or more have also seen a wider range of products to suit their needs. In September 2007, just 0.9% of products available were aimed at these customers, but today they account for 11.9% of the UK mortgage market.

Cook says falling house prices have caused lenders to scale back lending with small deposits, as there is a high risk the borrower will fall into negative equity before their deal period ends, increasing the risk for lenders.

He also expects mortgage rates to be affected by the recent rise in swap rates seen after Lehman Brothers collapsed.

The British Bankers’ Association  said mortgages approved for house purchases mortgage approvals slumped to just 21,086 in August. Down 64% from August 2007.

This was the lowest level of mortgage approvals since the figures started in 1997 and down from 58,564 in August 2007 when mortgage lending had already started to slow down.

The report  said mortgage lending was £2.1 billion in August, which was less than half the average level of £4.7 billion for the previous six months lending.

The BBA blamed the decline on falling property prices, the credit crunch, economic pressures on households, and tighter lending criteria.

It said anticipation of the Government’s announcement on stamp duty had also suppressed or delayed demand for mortgages in August.

These factors would continue having an impact in the months ahead, the report suggested.

David Dooks, statistics director at the BBA, said “The low number of mortgage approvals in previous months predicted lower gross lending in August and, together with remortgaging, a much weaker net lending figure than of late resulted.”

Howard Archer, chief UK and European economist at Global Insight, described the latest set of lending figures as “dismal”.

He said: “The BBA data graphically highlight that housing market activity continues to be throttled by stretched affordability and tight lending conditions.

“Widespread expectations that house prices will continue to fall markedly for some considerable time to come is also significantly limiting housing market activity, as is heightened concern over the economic outlook and job prospects.

“Furthermore, the current financial sector turmoil is likely to deepen the pressure on housing market activity through further tightening credit conditions and exerting upward pressure on interest rates.”

Demand for rented houses rose 65% between August 2007 and August 2008 according to figures relseased by agent Your Move.

This year has seen strengthening growth in rental demand far beyond normal fluctuations. Landlords have experienced the strongest demand from tenants in years, as property purchases slide in the face of the ongoing mortgage drought and credit crunch, according to Your Move management data and Bank of England figures.

Managing director of Your Move estate agents, David Newnes, said: “Mortgages are hard to come by and would-be buyers are flooding the rental sector. If you can’t get the finance to buy a house, you’re forced to rent.”

Lease commencements were up 12% from July 2008 alone - as thousands of would-be house buyers scrapped plans to get on the property ladder. The number of leases commencing in January to August 2008 in total is up 45% on the same period in 2007.

David Newnes continued: “We might expect the huge increases in demand for rental property to have driven up rents. But demand is being met by supply - sellers who won’t accept depressed prices put their homes up for rent instead. Tenants are benefiting from unprecedented choice as well as competitive rents.”

The Bank of England has just announced that it will be part of a massive central bank effort to improve the  liquidity of the financial markets.

The Bank of Canada, the Bank of England, the European Central Bank (ECB), the Federal Reserve, the Bank of Japan and the Swiss National Bank are announcing coordinated strategies designed to address the continued pressures in US dollar short-term funding markets. These measures, together with other actions taken in the last few days by individual central banks, are designed to improve the liquidity conditions in global financial markets. The central banks will continue to work together closely and will take appropriate steps to address the ongoing concerns.

The Bank of England will offer to lend each day US dollar funds overnight against eligible collateral. The first such operation will take place today. The amount offered in each repo operation will initially be $40bn. This amount will be reviewed on a regular basis, in consultation with the other central banks.

The US dollar repo operations will take the form of an auction. Eligible collateral will consist of securities routinely eligible in the Bank’s short-term repo Open Market Operations together with conventional US Treasuries.

The Bank of England has concluded a reciprocal swap agreement (swap line) with the Federal Reserve. Through this arrangement the Federal Reserve will provide the Bank of England with US dollar funding to facilitate these operations.