AMI responds to Bank of England £50 billion help plan

The Association of Mortgage Intermediaries (AMI) has today (21 April) cautiously welcomed the move by the Bank of England to offer up £50bn of Mortgage-Backed Securities (MBS) for government bonds.

Richard Farr, Director, AMI commented: "We are pleased that the Bank of England has announced a new liquidity scheme designed to inject around £50 billion in the mortgage market. It is hoped that the new liquidity will improve the smooth working of the market and be a contributing factor in restoring confidence. There is no one "silver bullet" solution to the current difficulties. The root of the current problems stem as much from trust and confidence issues as they do from standards of credit.

"The £50bn discussed looks like a substantial number but there are caveats that must be considered. If the larger lenders simply hoard the liquidity, to shore up their capital reserves or to provide more certainty for regulators, the consumer will not benefit - and neither will smaller lenders who have experienced the most pain to date.

"This week, we are publishing our own White Paper for the mortgage industry, setting out the causes and potential solutions to the current market turmoil. We have produced the White Paper because we do not believe that today's announcements, which are long overdue, go far enough. The White Paper sets out AMI's view of the issues behind the mortgage market's travails and provides four possible, intertwined solutions.

"We wish to see the return to a proper functioning market, focused on meeting the needs of mortgage borrowers today and tomorrow. For those in current difficulties, the Government may have to review the ISMI rules given the special nature of today's problems."