Post by Sapphire Capital on Aug 4, 2008 1:20:46 GMT 4
U.K. Mortgage Report Sees Pain Into 2010
July 30, 2008
LONDON -- A key report on the U.K. mortgage-market crunch on Tuesday said it will take a couple of years for the market to normalize.
The review, commissioned by the British Treasury and led by former HBOS Chief Executive James Crosby, said in its interim report that lenders will remain "severely constrained."
"In my opinion, such a shortage of mortgage finance will persist throughout 2008, 2009 and 2010," Mr. Crosby said in a letter to the U.K. Chancellor of the Exchequer, attached to the report.
The Bank of England reported earlier in the day that U.K. mortgage approvals fell to a record low in June and net consumer lending hit a nine-year trough. Mortgage approvals fell to 36,000, the lowest since records began in 1999.
As expected, Mr. Crosby said he was considering a range of options, including a widely supported plan from the Council of Mortgage Lenders for the government to set up a repurchase-agreement program allowing lenders to swap new mortgage-backed securities for cash. He said he is considering whether the government should offer guarantees on high-quality MBS loans -- mortgage loans packaged into bonds and sold to investors.
Mr. Crosby also said he may advise the government not to intervene in the market. The only solution he ruled out was a Fannie Mae, Freddie Mac-style U.K. mortgage agency.
The mortgage industry reacted with disappointment to the report. Some predicted serious economic impact if authorities didn't act soon.
source: Laurence Norman laurence.norman@dowjones.com
July 30, 2008
LONDON -- A key report on the U.K. mortgage-market crunch on Tuesday said it will take a couple of years for the market to normalize.
The review, commissioned by the British Treasury and led by former HBOS Chief Executive James Crosby, said in its interim report that lenders will remain "severely constrained."
"In my opinion, such a shortage of mortgage finance will persist throughout 2008, 2009 and 2010," Mr. Crosby said in a letter to the U.K. Chancellor of the Exchequer, attached to the report.
The Bank of England reported earlier in the day that U.K. mortgage approvals fell to a record low in June and net consumer lending hit a nine-year trough. Mortgage approvals fell to 36,000, the lowest since records began in 1999.
As expected, Mr. Crosby said he was considering a range of options, including a widely supported plan from the Council of Mortgage Lenders for the government to set up a repurchase-agreement program allowing lenders to swap new mortgage-backed securities for cash. He said he is considering whether the government should offer guarantees on high-quality MBS loans -- mortgage loans packaged into bonds and sold to investors.
Mr. Crosby also said he may advise the government not to intervene in the market. The only solution he ruled out was a Fannie Mae, Freddie Mac-style U.K. mortgage agency.
The mortgage industry reacted with disappointment to the report. Some predicted serious economic impact if authorities didn't act soon.
source: Laurence Norman laurence.norman@dowjones.com