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Fears grow over Tory plans to curb wholesale funding

Experts have raised concerns as to whether the coalition Government will look to implement the Conservative pledge to red-uce the mortgage market’s dep-endence on wholesale funding, warning any attempt to do so could hinder the recovery.

In its election manifesto, the Tories said they would seek to make the mortgage market less dependent on wholesale funding. However, in the coalition agreement with the Liberal Democrats, no mention was made of policy in this area.

Cicero Consulting director Iain Anderson says: “Having Vince Cable around the cabinet table with responsibility for reform of banking policy means we are less likely to see policy measures from Government to stimulate wholesale.

“But if wholesale comes back in its own way, I do not think they will put up any barriers to stop it. If the market is going to come back in any way, the wholesale component needs to be significantly larger than it already is.”

Portillion chief executive officer Stephen Knight says: “There is innate demand for these structures in the capital markets.

“It is true that, in addition to market forces, those who favour this form of funding or believe it is essential for mortgages also have to convince the Bank of England and the regulators.

“That will take time but the economy will not recover unless people can move when they want to, can release equity and move around for jobs.”


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