CML welcomes launch of mortgage finance working group

The CML welcomes the launch of the mortgage finance working group, under the chairmanship of Sir James Crosby, and looks forward to actively participating as it develops its proposals.

Action to restore the functioning of markets, including the market in mortgage-backed securities, will help improve the availability of market funding and sustain confidence in mortgage and housing markets.

The CML agrees with Sir James' assessment of the need for measures that are market-developed and market-led. That will be important in restoring the confidence of investors and reinforcing long-term stability in the market.

The need for action to improve the functioning of mortgage funding markets is pressing. The CML therefore believes that if the working group's interim report has a clear sense of priority and direction on measures that will help restore market confidence, they should be implemented without delay.

While Sir James and the working group are developing their proposals for the chancellor, the CML believes that other stakeholders, in particular the Bank of England, have an important role to play now. There is a need for action to inject greater liquidity into mortgage funding markets, and concerted action by central banks to increase and widen the availability of funding globally.

Commenting on the launch of the working group, CML director general Michael Coogan said: "The working group has been given a broad remit to consider what is needed to restore confidence in mortgage funding markets. Of particular importance is the acknowledgement that the market needs more effective disclosure of the quality of underlying mortgage assets, which in the UK remains good.

"The reality is, however, that confidence in the market for mortgage-backed securities in particular cannot be restored over night. Meanwhile, the shortage of funding is creating disruption in mortgage and housing markets now. While the working group is developing its proposals, we therefore believe there is a need for more immediate action by the central banks, in particular the Bank of England in the UK, to address market funding problems."