Bank of England Unveils £50bn Mortgage Bailout
The Bank of England (BoE) launched an unprecedented £50 billion scheme this week to bail out Britain’s ailing banking system and help to ease the tightening mortgage market.The BoE confirmed that it would allow lenders to swap assets for government-backed bonds in an attempt to restore confidence and ease the effects of the credit crunch.
The BoE will allow banks principally to swap UK and European mortgage-backed assets for "safer" government bonds, which banks can then use to raise money.
Mervyn King, the Governor of the Bank, said on monday: “The Bank of England’s special liquidity scheme is designed to improve the liquidity position of the banking system and raise confidence in financial markets while ensuring that the risk of losses on the loans they have made remains with the banks.”
Not everyone has confidence in the new plan; Liberal Democrat deputy leader Vince Cable said:
"I am very concerned that in addition to all the costs associated with Northern Rock, the government is going down the disastrous road of bailing out the banks and leaving the taxpayer with the liabilities,"
The government's decision to go down the route of support for the banks confirms the uncertain state of the housing market, which is having an effect on people's house sale decisions. Many more people are now thinking, "shall I get a house buying company to buy my house?", and are choosing to avoid the long waits, uncertainty and stress of selling their home on the open market by selling their home to quickmovenow.com. Call us for more details.
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