UK banks develop property market revival plan

Lenders have come up with a plan to kick start the UK’s mortgage market and reinvigorate the property industry. The Council of Mortgage Lenders (CML) said its idea was designed to

“help the financial system help itself”.

Its scheme involves the Bank of England offering a form of secured lending using new UK residential mortgage-backed securities as collateral or covered bonds. To qualify, the securities and covered bonds would first have to be sold to investors in a public issue.

The CML said:

“This is of crucial importance, as it would ensure that the market itself is essentially delivering the solution, with the repo facility simply acting as a catalyst to restore market confidence.”

Officials have already submitted a document explaining the plans to the Crosby review of housing finance and the Treasury.

CML director general Michael Coogan said:

“If they act quickly, there is a window of opportunity here for the Government and the Bank of England to break the logjam in the housing and mortgage markets and underpin confidence in the financial system.”