BoE 'needs to improve liquidity'

Posted: 25 Mar 2008 15:02:59 GMT

The director general of the Council of Mortgage Lenders (CML) has called on the Bank of England (BoE) to address the "ongoing problems" in the mortgage market in the wake of new figures which show gross lending fell in February.

The director general of the Council of Mortgage Lenders (CML) has called on the Bank of England (BoE) to address the "ongoing problems" in the mortgage market in the wake of new figures which show gross lending fell in February.

According to the CML, gross lending fell by seven per cent from £25.9 billion in January to £24 billion in February.

Meanwhile, gross lending was down six per cent when compared with the £25.6 billion figure recorded in February 2007.

Michael Coogan has attributed this fall to low levels of liquidity which mean that lenders cannot meet demand for mortgages.

As a result, he believes the BoE needs to take action to ensure that this situation is bettered.

"We have entered a substantially slower phase in the housing market and there will be ongoing problems in the mortgage funding markets unless the Bank of England makes new, broader based attempts to improve levels of liquidity in the UK," he commented.

"Demand for mortgages remains strong but cannot be fully met from existing funding."

The last decision of the BoE’s monetary policy committee was to keep interest rates on hold at 5.25 per cent.

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