Mervyn King, governor of the BoE ruled out any extension of the scheme last week, which was due to close on October 21 2008.
Commenting on the u-turn, Michael Coogan, director general at the Council of Mortgage Lenders, says: “In making a clear announcement today, the bank has shown a welcome flexibility to respond to difficult market conditions. Its action should help promote stability at a time of uncertainty, and we would urge the Bank to continue to show flexibility, given that market conditions will remain challenging next year.
“Immediate prospects for an improvement to the operation of wholesale mortgage funding markets had not been helped by the recent tightening of liquidity in response to more widespread financial market uncertainty. The removal of constraints to mortgage funding remains an important requirement for any longer term recovery in the housing market.”