Bradford political leaders are divided over proposals for the authority to offer mortgages to aspiring home-owners struggling during the credit crunch.

The department for Communities and Local Government was today expected to allow councils to lend at 3.93 per cent to prospective house-buyers.

Supporters hope council mortgages will stave off repossessions and evictions, prop up the housing market and support first-time buyers.

But Bradford Council leader Kris Hopkins said: “I can’t see how the Council is in a position to offer mortgages. There are ways to borrow through credit unions and we are quite happy to facilitate those services in Council buildings. But the Council should not be using its resources for it.

“There is limited money available to spend and that should be spent on core services for children, on regeneration, elderly people, getting the bins emptied. That is the day job and that is what we should be concentrating on.”

However, Ian Greenwood, Labour leader on Bradford Council, said: “The Council did it in the 70s and it was highly successful. Clearly we wouldn’t want to divert money from core services but one of the things about mortgages is that people pay them back over a period of time.

“I think it is particularly worth looking at this for people on low incomes because they often have no other way to get mortgages.”

Jeanette Sunderland, leader of the Liberal Democrat group, said: “The only people who would benefit from this would be the highly-paid consultant bankers who have got us into this mess in the first place.

“The length of time it would take for the Council to set up a scheme like this and the amount of money the Council would pay would far outweigh the benefits.”

The proposals have been backed by the New Local Government Network, a think tank led by former Shipley MP Chris Leslie.

Mr Leslie said: “Councils used to be in the mortgage business until the 1970s and 80s when this facility was wound down by the Government, as it was then assumed that the private banks could cope. We now know that a diversity of mortgage provision is needed to prevent the current crisis.”