Action required to fight credit squeeze

Permalink: Action required to fight credit squeeze
by Kay Murchie

Steven Crawshaw, chairman of the Council of Mortgage Lenders (CML), said more action is required from the Bank of England to tackle the credit squeeze to help lenders provide Britons with mortgages.

Mr Crawshaw is urging the Bank of England to pump further liquidity into the markets as the US Federal Reserve has done. He added that lenders were not shirking from the market and were taking strenuous efforts to deliver mortgages to as many customers as possible within the current funding limits.

He denied charges that banks were hoarding liquidity as they did not trust one another and said we think that lenders are hoarding liquidity because they’re concerned about whether they will be able to access future funding and are managing pipelines of business very cautiously.

He is calling on Chancellor Alistair Darling to take urgent action to address funding issues, such as helping borrowers struggling with their mortgages. Underpinning those borrowers in serious and short-term financial difficulty to help minimise the level of repossessions is a clear spend-to-save policy, explained Mr Crawshaw.

The Bank of England should extend its three-month loans to 12 or 24 months to boost liquidity, as well as kick-starting the market for new mortgage-backed securities, said Mr Crawshaw.

The latest figures from the CML showed the number of mortgages being lent for house purchase fell to its lowest level for 16 years in February.

The CML’s mortgage figures for the 3 months to February, at a combined 163,000, are the lowest for any quarter since early 1992.

There are now just 4,270 different mortgage deals on the market, compared with 15,599 last July.