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Chancellor in crisis talks with CML

Tuesday, 22 April 2008 12:00 AM

The chancellor Alistair Darling met some of Britain's biggest mortgage lenders later today in a bid to ease the growing burden on homeowners caused by the credit crunch.

The chancellor met with Council of Mortgage Lenders (CML) representatives over implementing some key strategies in order to help those most at risk of losing their homes in the financial squeeze.

The measures discussed included mortgage repayments holidays for borrowers who have been hit hardest by rising interest rates and payment shocks from coming off fixed rate deals.

First-buyer assistance was also discussed.

Mr Darling also looked to lenders to pass on recent interest rate savings to their customers, following the Bank of England's move yesterday to increase liquidity through its security swap.

However, no solid declarations were made after the meeting, and speaking to the BBC after the meeting CML director general Michael Coogan said the payment shock for those remortgaging from fixed rate deals had mostly passed its peak.

He also called on the government to take a greater role in providing assistance for homeowners struggling with their mortgages.

"In the light of everything we are doing with [mortgage lenders], I want to discuss with them how they can pass on the benefits of falling interest rates as well as wider government support to mortgage holders," Mr Darling told MPs yesterday.

The news follows an earlier announcement from Mr Darling in which he pledged £50 billion to bail out the country's banking network, as it has also struggled to cope recently.

The Bank of England will swap government bonds for some of the banks and building societies' more volatile mortgage-backed assets in a bid to stabilise the sector.

Commenting today, Chris Cummings of the Association of Mortgage Intermediaries (AMI) said: "We strongly feel that that mortgage market has passed the stage where it is able to heal itself and find a resolution to the current crisis.

"If the market carries on as it is, consumers will continue to suffer as the availability of suitable products will begin to dry up and the industry will continue to shed jobs at an increasing rate."

Solutions put forward by the AMI include courting sovereign wealth funds to invest the in the UK mortgage markets, the creation of a new gold standard for mortgage-backed securities, and the provision of more cash into the markets from the Bank of England.

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