Each week, a leading mortgage commentator will discuss strategies to cope with market conditions.
This week, Checkmate Mortgages executive chairman Stephen Knight sets out his plan. He considers the £50bn liquidity injection will help over time but believes the Bank of England could have been more prescriptive about what it wanted lenders to do with the money.
He says an instruction to launch first-time buyer products or reduce SVRs, for example, could have ensured that the benefit of this money would be seen beyond the banks’ balance sheets.
Knight says the key to restoring liquidity to the wholesale-funded intermediary-friendly market is the return of securitisation and portfolio sales at normal premium rates.
He suggests the first stage in that recovery is for all the old stock of mortgage portfolios from distressed and exiting lenders to dry up, accompanied by a slow return of mortgage-backed securities in the secondary market.
To read Knight’s views on Cracking the Crunch, go to www.moneymarketing.co.uk