This was the message from chancellor Alistair Darling last week as the Treasury unveiled its Mortgage Finance Working Group, to be led by Sir James Crosby, deputy chairman of the Financial Services Authority.
The group, which will comprise nine experts from the mortgage and investment markets, the Bank of England, the Treasury and the FSA, is charged with developing a plan to tac-kle securitisation issues.
Darling says: “The disruption in glo-bal financial markets has raised complex issues about the functioning of mortgage-backed securities. This group will make an important contribution to stabilising the cost and supply of UK mortgages.”
The Council of Mortgage Lenders says it is looking forward to participating in the taskforce but reminds the government that the funding problems lenders are suffering must be tackled immediately.
Michael Coogan, director-general of the CML, says: “The shortage of funding is creating disruption in the mortgage and housing markets now.
“The CML believes there is a need for more immediate action to address funding problems, particularly by the Bank of England.”
This follows reports that the Treasury is considering acquiring mortgage- backed securities and holding them on the BoE’s balance sheet until the market returns.
Stephen Hynes, structured finance director at GMAC-RFC, says this plan could be a step on the road to recovery for the securitisation market.
He says: “We have seen similar act-ion by the European Central Bank over the past few months which has allowed lenders to fund themselves.”