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Coalition shifts wholesale funding stance

Mortgage experts believe the coalition Government has changed its stance on wholesale funding, offering hope that it may take steps to resolve the current funding shortfall.

Before the election, the Conservative party pledged in its manifesto to make the mortgage market less dependent on wholesale funding.

It said: “We will reform the regulation and structure of the banking system to ensure lower levels of leverage, less dependence on unstable wholesale funding and greater availability of credit for small and medium-sized enterprises.”

However, a recent Treasury green paper entitled, Financing the Private Sector Recovery, says: “Securitisation can be an important source of funding for both banks and non-bank lenders. The financial crisis indicated significant underlying failings in these markets as previously constituted and underlines the importance of reform to ensure that in the future the securitisation market is a more sustainable and robust market.”

Cicero Consulting director Iain Anderson says: “There is absolutely no doubt that since the election there has been a marked shift in the stance of the coalition from what they were saying before the election which suggested they would not touch wholesale funding with a bargepole.”

Anderson says the change is probably due to the coalition having access to the kind of data that is only available to parties in Government. He adds: “They clearly appreciate the impact on the market of not having a free-flowing wholesale market. There is a recognition in Government of the need to look at mechanisms to bring the market back.”

A Council of Mortgage Lenders spokesman says: “Clearly, we would like to see a return to a robust and secure securitisation market. What is missing is a plan for getting there and, in the meantime, lenders and borrowers are affected by a shortage of mortgage funding.”


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There are 2 comments at the moment, we would love to hear your opinion too.

  1. “Anderson says the change is probably due to the coalition having access to the kind of data that is only available to parties in Government”.
    Surely this blows away the myth of the benefits of having “outside interests” being beneficial to democratic government -it simply does not exist in the real world.

  2. I hope that the so called investment bankers pay for “full structural surveys” instead of a “valuation for mortgage purpose” ignoring “book value” before parting with our money putting bonus first. Regulators, FSA.GOV.UK, BANK OF ENGLAND AND THE TREASUARY, should stop the practice of giving INVESTMENT BANKERS or people with fancy names and titles a free hand to do as they like and purchase in any market with no concern for quality or underwriting standards. While continuing the crucifixion of those on the front line, AR’s, IFA’s and mortgage brokers who do an excellent job under the guise that they are all “rouges on the register” and the FSA.GOV.UK is the consumer champion dishing out the pill of TCF (treating customers fairly) medicine.

    Last but not least, is it not time that the law and courts that give tenants rights are updated so that tenants are made to understand that their “Home will be repossessed if rent is not and paid late defaults will be registered against them?” Why is it right that landlords, normal people investing for their future instead relying on the state, and lenders should go out of business because tenants are free to do as they like with the blessing of the state and the courts? Why it is right that they must meet the monthly interest payments and the tenant can go on holidays using the rent money?

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