AFB: Bank of England Financial Stability Report

The Association of Finance Brokers (AFB) has welcomed the publication of the Bank of England Financial Stability Report which states that the correction in the credit markets has gone too far and that risk appetite should return in the coming months.

AFB calls on lenders to reappraise their current positions and start lending to each other to unblock the market in order that consumers may benefit from improved access to credit. AFB believes it is crucial we avoid a situation that could become a self-fulfilling prophecy, with tight credit conditions potentially leading to a pickup in defaults among vulnerable borrowers.

Robert Sinclair, AFB Director, said: "Building on AFB's sister organisation AMI's Solutions to the Credit Crunch White Paper, the Bank of England has identified key actions to rebuild confidence in the market. These include a new scheme aimed at improving the liquidity position of the banking system and frequent and co-ordinated disclosure by banks of positions and losses."

The Bank has also identified that some Mortgage Backed Securities now 'look cheap'. The Bank thinks there will be no defaults of triple A rated securities, making these good investments.

Robert added: "Following AMI's White Paper, further meetings are now being held with Bank of England officials and policy makers in order to offer advice and help address the issues in the market. AFB, AMI and AIFA will continue to apply pressure to market participants to achieve the best outcomes for members. We believe that resolving issues in the first-charge securitisation market will result in quicker, positive outcomes for second-charge lenders, and thus AFB members."