Brown hedges on US-style mortgages

CHANCELLOR Gordon Brown has left open the option for Britain to model its mortgage market on America, despite an accounting scandal engulfing the US system.

The American model, centred on Fannie Mae, a giant government-backed loan company, means most homeowners can take mortgages with interest rates fixed for long periods, even the full 25-year term.

But it has been hit by claims from US regulators in the past month that its accounts were 'massaged'. The US Congress will hear evidence this week from the head of Fannie Mae while the Justice Department is understood to be considering a criminal probe.

Brown is known to favour long-term, fixed-rate mortgages to shield British homeowners from fluctuating rates. He told Financial Mail: 'We are not modelling our system on one institution and the debate on housing finance in the UK goes on. But you cannot generalise from the problems of one instance.'

The European Mortgage Finance Agency, a trade body funded by banks including Abbey, has been working to promote a European version of Fannie Mae.