Two of the countries biggest lenders have pulled out of discussions with the Government concerning plans to build affordable housing under its shared equity scheme.
Both Alliance and Leicester, and Abbey have halted discussions with the Office of the Deputy Prime Minister and the Council of Mortgage Lenders. Under the proposed scheme, the government and a lender would both contribute 12.5%, reducing the purchase price and cost of mortgage payments for the buyer.
A spokesperson for Abbey believes that the limited size of the trial, with only 20,000 mortgages involved, would not be cost effective.
Negotiations with the Yorkshire Building Society, Halifax and Nationwide are continuing.
Our view
If it does not make business sense then both Abbey and A&L are right to pull out.