At long last there seems to be an effort to resolve the current credit crisis. This is a bold statement and perhaps comes 8 months to late but nevertheless would seem to be good news.
A permanent cloud has been hanging over the mortgage market since August last year and it now looks like there are signs the government have realised the severity of the situation and are looking to address the liquidity issues.
The Mortgage Finance Working Group has been set up which will draw on the experience and expertise of lenders, investors and the Tripartite Authorities (the Treasury; the Bank of England; and the Financial Services Authority. It is headed up by former HBOS chief executive Sir James Crosby. The remit for the group is to restore confidence in the securitisation market, help improve the availability of funding and sustaining confidence in the mortgage and housing markets.
It will be a tough job which is made tougher by the fact that the government is only starting the task now, 8 months after the horse has bolted!
The current crisis is the biggest economic shock since the Great Depression. This opinion was voiced last week by the chancellor Alistair Darling.
A lot of criticism has been placed on lenders for changing criteria, putting rates up and effectively looking for reasons not to lend but it is understandable. As businesses they are fearful of the fact that they will not be able to access future funding and are desperately trying to manage their pipelines so they can continue lending for as long as possible.
It is good to finally see some positive news against a back drop of such negativity.