Panics over guys. Help is coming.

rizla01

August 13, 2008


Alistair Darling scrambles to end mortgage drought











The scheme allows banks to swap mortgage-backed bonds issued before the end of 2007 for much more tradeable Treasury bills that can then be used to raise funds in the markets.

An extension of the scheme would open the way for it to accept new issues of mortgage-backed securities made since the December 2007 cut-off in an attempt to boost the financing available to banks for new home loans.
Mr Darling is also considering a more controversial multibillion-pound plan for the Government itself to guarantee temporarily high-quality mortgage-backed securities. This could help to create investor demand for the government-backed bonds, assisting lenders to sell on their loans and so increase the supply of finance for lending.

Both proposals may, however, run into significant resistance from the Bank of England. Officials there are thought to see little case for accepting new mortgage loans into the emergency financing scheme, because lenders have large stocks of already eligible bonds on their books that they have yet to swap for Treasury bills. The Bank is likely to be wary of a publicly funded subsidy for new lending.

The Chancellor is also still considering whether to suspend stamp duty temporarily as another way of boosting the market.
His refusal to confirm or deny the plan when it emerged last week led to claims from estate agents, repeated yesterday by David Cameron, that people are delaying house purchases until they know whether the stamp duty concession will be confirmed in the Pre-Budget Report in the autumn.
The Treasury was irritated by the stamp duty leak, which many assumed to have come from Number 10, as a potential part of Gordon Brown's economic recovery plan.

Ministers also counter that buyers are more likely to be waiting to see how far house prices fall before they take the plunge.
They believe that far more important than any decision on stamp duty will be getting money back into the banking system. They say that the credit crunch has virtually cut the funding available to lenders in half.
The proposals to extend the Bank's liquidity scheme and create a government guarantee for high-quality mortgage securities were raised last month in the interim report to Mr Darling by Sir James Crosby, the former chairman of HBOS.

Although Sir James pointed to drawbacks in both ideas, and Bank officials are understood to believe that there is no “silver bullet” to cure the mortgage market's woes, Mr Darling is believed to be attracted to them as means to stimulate activity


Some other interesting reading here.
Related Links

• Food prices push inflation to 16-year high

• Mortgage lending falls 32% as prices slump

House price trends: region by region





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poppy10_2

oldnews?

This is the internet age, rizla, 2 weeks ago is a lifetime.

wymondham

That's it then, we're all doomed if Darling's coming to the rescue!! :rotfl:

rizla01

poppy10 wrote: »

oldnews?

This is the internet age, rizla, 2 weeks ago is a lifetime.

OOps. You're right.

I just followed a link and ....Ol bvgger!!

Chris2685

I wondered if 13th August was a typo

lonestar1

rizla01 wrote: »

....
They say that the credit crunch has virtually cut the funding available to lenders in half.
.....
Although Sir James pointed to drawbacks in both ideas, and Bank officials are understood to believe that there is no “silver bullet” to cure the mortgage market's woes,

Seems to me that the obvious silver bullet would be to let house prices fall by 50% at which stage the 50% of funds available would be able to meet 100% of the funds required.


In other words if you halve the supply and then halve the demand, supply still meets demand