16
Jul
CML proposes alternative liquidity scheme
The Council of Mortgage Lenders (CML) has proposed an alternative
liquidity scheme to address the current downturn in the mortgage
market, it has been announced.
CML's blueprint focuses on assisting the financial system to help
itself, with an ultimate goal of reducing the severity of the
situation.
In the UK the residential mortgage-backed securities market and
covered bond market have suffered in from the credit crunch. The
CML's plan is "a way of kick-starting [them] back to life" by
having the Bank of England offering a repo facility.
The markets involved would have to sell their products to investors
as a public issue to improve confidence and allow them to restore
stability itself, the CML said.
However, "speed is of the essence", CML director general Michael
Coogan said.
"There is a window of opportunity here for the Government and the
Bank of England to break the logjam in the housing and mortgage
markets and underpin confidence in the financial system," he
said.
He added investors will keep the credit risk, unlike a government
guarantee.
In response to the proposals, Connells Survey & Valuation today
said it agreed that quick action was needed, describing this as
"vital".
