CML expresses doubt about mortgage scheme

The Council of Mortgage lenders (CML) has questioned how much effect the government's plan to boost the mortgage market by allowing banks to trademortgage debts for securitised bonds will actually have.

In the announcement toady, the Bank of England said £50 billion worth of bonds would be made available for the scheme, with governor Mervyn King insisting that the liability will remain with the banks and not the taxpayer.

However, CML director general Michael Coogan said the plan would not necessarily free up more funds for mortgage lending, partly because some smaller lenders and building societies were excluded from the move and partly because the levels of mortgage pricing "will be affected more by how Libor responds to the announcement."

He concluded: "The improved liquidity is unlikely to reverse the trend to higher mortgage costs we have seen in recent weeks."

Without a major improvement in the mortgage market those looking on the housing ladder may have even more reasons to consider the self build option.


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