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Halifax is resurrecting the practice of offering large incentives to entice mortgage customers, the first time that has been done since the credit crunch hit two years ago. From Monday, Britain’s biggest mortgage lender, which is part of the state-controlled Lloyds Banking Group, will offer to pay up to £1,000 of a homebuyer’s council tax bill for a year when they take out any Halifax mortgage for a new home with a deposit of at least 10 per cent. Although many lenders have been offering free legal advice or property evaluations in recent months in an effort to lure new customers, Halifax is the first bank to revert to the eye-catching deals that were prevalent before the housing market crashed. West Bromwich Building Society offered a free Rover car, worth £7,850, with one of its home-loan deals in 2004. Two years later, Scarborough Building Society enticed borrowers with the promise of a new Sony plasma TV and home cinema system worth £2,500. Halifax charges 4.15 per cent interest on a fixed-rate mortgage deal for those with a 40 per cent deposit, and those with a 10 per cent downpayment must pay nearly 7 per cent for a five-year fix. Buyers with a smaller downpayment do not qualify for any deal at all. For the average household, in council tax band D, the latest Halifax inducement would save the purchaser only £580. State-backed lenders have come under pressure to provide a shot in the arm to the housing market, which continues to suffer from a lack of affordable home loans for many buyers. As activity in the market has stalled, house prices have plunged by nearly 20 per cent, with sellers slashing prices in an attempt to generate interest. Cash-strapped first-time buyers, who are crucial to the health of the housing market, have struggled to secure mortgages because banks have reserved the most competitive deals for those with substantial deposits. Mortgage brokers said that, although the signs of more lively competition in the market were to be commended, the rates on the deal were not particularly competitive. David Hollingworth, of London & Country Mortgages, the broker, said: “Innovation should be welcomed, but homeowners will have to do their sums to gain a true assessment of its value over the term of the deal.” Ray Boulger, of John Charcol, another mortgage broker, said: “It will not be good value for most first-time buyers, who will be moving into smaller properties with lower council tax bills. The rates offered by Halifax for first-time buyers with small deposits are not competitive, and so the actual benefit is likely to be relatively small, if there is any at all.” The fresh mortgage push came as Kate Barker, a member of the Bank of England’s rate-setting Monetary Policy Committee, suggested that banks and building societies had overreacted in their rush to withdraw mortgage deals for borrowers with small deposits. “The big slide down to 75 to 80 per cent [loan to value] may be overdone,” she told The Spectator. She said that mortgages that left buyers with an immediate risk of negative equity should not be banned. “I’m not personally convinced I want to say we’d absolutely never have 100 per cent mortgages,” she said. “You might want to have rules about the averages across the book, all that kind of thing, rather than saying ‘no, never’, because personal circumstances vary enormously.” Her comments fly in the face of the Government’s pledge to c