The Council of Mortgage Lenders (CML) today said govt intervention was needed to help the home finance industry.

 Responding to today’s release by the Treasury of Sir James Crosby’s interim review of the mortgage finance markets, the Council of Mortgage Lenders welcomes the analysis and the recognition that a shortage of mortgage funding will persist for years without intervention.

The CML now urges the Treasury to work with urgency on measures to address the mortgage funding gap, whether through the industry’s suggestion of a market-led solution to incentivise investors via a repo facility, or through other mechanisms as outlined in the report.

If proposals are implemented in the autumn, it will be more than a year after the first effects of the credit crunch took hold: more than enough time to recognise that the markets are not showing signs of self-correcting over a reasonable time horizon said the CML in a press release.

CML director general Michael Coogan said, “as the Bank of England lending figures today show, the mortgage market remains severely constrained. In aggregate, lenders are unable to meet the consumer demand for mortgages because there is not enough funding available to them. Without action, the situation in the housing market will be worse than it needs to be. The housing correction will overshoot, and the knock-on effects on the wider economy will be significant.

Today’s analysis at last sets down an independent welcome marker that intervention to address the mortgage funding gap is both appropriate and necessary. It creates a clear expectation of measures at the time of the pre-Budget report. "We now look forward to working urgently with the Treasury over the summer on proposed solutions,” said Coogan.

Bank of England drops bad news

Today the Bank of England released dismal figures on the rate of mortgage lending.

The increase in net lending secured on dwellings was £3.1 billion, this figure is below the increase in May and the previous six-month average. These figures will come as no surprise to a housing market that is starting to see house prices stop rising and in some circumstances fall as a result of tighter credit lines.

The numbers of loans approved for house purchase stood at 36,000, remortgaging at 84,000 and other purposes 45,000. All figures were lower than in May.

The government in recognising the housing market crisis has indicated that they may have to give a taxpayer guarantee to billions of pounds of mortgage market bonds.

This comes with a report commissioned by the Treasury that has suggested possible options to reviving the housing industry through stimulating the mortgage market.

The assessment of the outlook for mortgage finance is due to be published later by Sir James Crosby, the deputy chairman of the City watchdog, the Financial Services Authority.

Share this: digg   del.ico.us   Newsvine   Reddit   Furl   technorati   Facebook

Comments (0)

Subscribe to this comment's feed

Name (required)

Email (required) (not published)

Website

Title

POST

By posting on this website you are agreeing to abide by our website comment policy and all posts are subject to the approval of the website editor. We will remove posts that contain offensive or threatening language, personal attacks on the writer or other posters, posts that are off topic and posts that are considered spam or specifically used to promote any commercial products or services. Any poster who repeatedly contravenes the policy will be banned from posting on the website.