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Security scheme needs wholesale widening

Mortgage industry pundits have warned more is needed to boost wholesale mortgage markets.

The Government is launching an asset guarantee scheme guaranteeing £50bn of AAA mortgage securities for six months, which contain loans originated after 2008 by banks and building societies up to 90 per cent loan to value. It has a credit guarantee on the issuer’s obligations and a liquidity guarantee for any bonds that have an option where the issuer has to buy back the bond.

Intermediary Mortgage Lenders Association executive director Peter Williams says: “There are a lot of limitations to the scheme but it is a start. Hopefully it will get the market moving and reignite investors’ interests.”

But Homefunding chief executive Tony Ward says: “Investors are not buying mortgage-backed securities because they are illiquid and they can’t be traded.

“It would have been much more useful if the Treasury opened up the discount window facility to non-banks like pension funds. Then they could make money back on any assets they chose to buy.”


Zurich makes group risk debut

Zurich Corporate Risk has made its debut in the group risk market and aims to be a top five player in the group risk market by 2012.


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