Mortgage funding and the swan song budget
Share
Alistair Darling’s parliamentary expenses showed that he needed the professional help of an accountant to complete his tax return, so if this is evidence of his financial acumen, don’t expect too much from his swan song budget on Wednesday.
No doubt like the Tories he will be advocating a green bank, which is presumably better than nationalised banks still in the red, and we can expect him to play court to the holier than though brigade with big increases in the duty on booze and cigarettes.
But as I wrote in this column last week, the £300bn question is will there be any attempt to resolve the mortgage funding dilemma facing the banks and building societies as they struggle to repay the huge swathes of money they borrowed under the Special Liquidity Scheme and the Credit Guarantee Scheme?
As things stand mortgage lenders will have to repay some £300bn of lending support between 2011 and 2014 and that’s in addition to replacing other maturing debts running into billions of pounds.
And all the while they are being expected to support the mortgage market, otherwise we will be back to square one with more bank rescues, the only difference being that next time round the coffers will be empty.
It will be a hard struggle given that the European Commission and the Financial Services Authority are also intent on deleveraging the balance sheets of our financial institutions and it is pure wishful thinking to believe that the mortgage market can be funded by retail savings alone.
Coincidently these issues will be identified and explored at a conference organised by the Mortgage Funding Group at the British Library in London on Wednesday.
The MFG is a cross industry forum and the event itself is designed as a launch pad for the organisation which will be using the day to consider new funding strategies, the current requirements of funding users and providers, and how to work with government and regulators.
Looking at the programme, the morning is devoted to setting the scene but perhaps fortuitously the afternoon will be informed and enlivened by what the chancellor had to say in his budget statement.
This will be relayed to delegates during the lunch break and set a challenge for Phil Jenks, once the mortgage supreme of HBOS and now an industry consultant, whose task at half past three will be to asses what the government and the regulators ought to be doing.
I’m looking forward to the moment and with the interests of the industry at heart I hope he will be working from fresh notes rather than his prepared script but I’m not optimistic.
