The Bank of England is to extend the drawdown facility for its Special Liquidity Scheme (SLS) until the end of January.
The SLS allows lenders to temporarily swap AAA rated illiquid assets, such as RMBS, covered bonds and ABS, for liquid Government bonds.
Michael Coogan, director general of the Council of Mortgage Lenders, said: “The Bank has shown a welcome flexibility to respond to difficult market conditions. Its action should help promote stability at a time of uncertainty, and we would urge the Bank to continue to show flexibility, given that market conditions will remain challenging next year.
“Immediate prospects for an improvement to the operation of wholesale mortgage funding markets had not been helped by the recent tightening of liquidity in response to more widespread financial market uncertainty. The removal of constraints to mortgage funding remains an important requirement for any longer term recovery in the housing market.”
Date: 16th, September, 2008
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