Thursday September 4, 08:57 AM
UK lenders call for extension of BoE liquidity plan
LONDON, Sept 4 (Reuters) - British mortgage lenders have urged the authorities to renew the Bank of England's mortgage swap plan well before the emergency window closes in October to help revive the housing market as the credit crunch drags on.
In a letter to finance minister Alistair Darling this week, the Council of Mortgage Lenders said it saw 'funding problems in the mortgage market as a fundamental bar to meaningful housing market recovery'.
'We believe that an early announcement of the renewal/extension of the Special Liquidity Scheme and any other measures being planned will help to resolve market uncertainty,' CML director general Michael Coogan wrote in the letter dated Sept 3.
The Bank (TBHS - news) 's liquidity scheme, initiated on April 21 for six months, allows banks to swap hard-to-trade mortgage securities for government debt, as long as the mortgages are dated before 2008. Banks can roll over the swaps for three years.
Estimates of the value of mortgages swapped range from 50 billion pounds ($89 billion) up to 200 billion, although the central bank has not set an upper limit.
There have been calls for the deadline to be extended and for new mortgages to be made eligible, but officials remain tight-lipped over whether the scheme will be expanded.
A government-sponsored report on how to revive the mortgage market is expected to be published in the coming weeks. ($1=.5619 POUND) Keywords: BRITAIN BANK/MORTGAGES
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