16 Jul

CML proposes alternative liquidity scheme

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".

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