CML welcomes changes to credit guarantee scheme

The Council of Mortgage Lenders says it welcomes the government\'s changes to make the Credit Guarantee Scheme cheaper for lenders.

The government yesterday revealed that it was adjusting the formula that determines the fees paid by participating institutions for use of the government guarantees.

This will lead to those institutions paying a lower – but still commercial – fee for use of the scheme, reducing their cost of funding under the scheme, and more closely aligning the scheme with those in other countries.

The aim is that this will spur banks to start lending to consumers again.

The Treasury is also continuing to 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.”