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SLS extension branded the ‘madness’ of Mervyn King

Bank of England governor Mervyn King’s U-turn on the Special Liquidity Scheme – he has extended it for three months into the new year – has come under fire from Peter Williams, executive director of the Intermediary Mortgage Lenders Association.

Williams has described the extended terms of the SLS as madness, not because he rejects the scheme itself but because it does not address the fundamental problem facing the mortgage market.

He warned that while the bank’s decision to extend the SLS term for most lenders is to be welcomed, it does little to improve the state of liquidity in the mortgage market.

Williams said: “With such turbulence in the market LIBOR has moved up again, having already reached a seven-year high this week [week of September 16 – ed].

“Banks are unable to help themselves in these conditions and the strength of our economy depends in part on their health.”

He argues that the BoE can neither afford to ignore this nor continue to oppose government support, with respect to the wider financial stability agenda.

The SLS still excludes lenders which do not take deposits, preventing a large proportion of the mortgage market from moving the assets on their balance sheets.

Williams added: “It’s madness to rule a large number of intermediary lenders out of accessing these funds when mortgage finance is so tight. IMLA strongly urges the BoE to reconsider which lenders the SLS is available to, so as to create a level playing field.”


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Nationwide to increase rates

Nationwide is increasing its rates tomorrow by 0.20% across its range of fixed rate mortgages.

Senate passes US rescue bill

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