CML welcomes changes to credit guarantee scheme

The Council of Mortgage Lenders has welcomed the Treasury’s changes to the credit guarantee scheme, which will make it cheaper for lenders to gain access to the government’s guarantees helping them gain access to wider market funding.

The government announced the proposals yesterday to bring down the costs for lenders to use the scheme, which provides a government guarantee for a fee.

The way the fees are determined is being changed so that lenders using the scheme will be charged a lower fee for use of the government guarantee. The Treasury maintains this will still be priced at a commercial rate.

The aim is to reduce the cost of funding under the scheme, first announced in October, and bring it more in line with the cost of funding in other countries.

The CML has also welcomed the Treasury’s continuing work towards working up its proposal to seek State Aid approval from the European Commission for the Crosby report proposals, and hopes this can press ahead quickly.

Michael Coogan, director general of the CML, says: “The government now seems to be hearing the message that lenders cannot realistically deliver all that is expected of them under current conflicting expectations, and moving to address some of these. We welcome the Chancellor’s acknowledgement that there is still more that the Government can do to help try to facilitate more conducive conditions for lending.”