22 Jan

Expert tips lending to increase

Expert tips lending to increase

There is a good chance that the latest government moves to help the banking crisis will enable them to increase their lending, an expert has commented.

Managing economist for the centre for economics and business research Ben Read said that "toxic debts" represent the "root" cause of the credit crunch and that the latest package of measures announced could help to dispose of these.

He added: "That also creates a level of trust between the banks that a lot of these toxic debts are off their books [and] that is likely to boost lending."

Such a development could be good news for those looking to move house or get on the ladder for the first time, as it could see more mortgage lending take place.

The package unveiled this week includes an extension of the maturity date for the Bank of England's discount window facility - in which less liquid assets are swapped for greater liquidity - a protection scheme for capital and assets plus a new asset-backed securities facility.

Another aspect of the plan is for Northern Rock to provide more home loans instead of running down its mortgage book.

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