IMLA: Extension of SLS is of little help to liquidity

Date:Friday 19th September 2008

The Bank of England's extension of its Special Liquidity Scheme (SLS) will do little to help liquidity in the mortgage market, it has been claimed.

Peter Williams, executive director of the Intermediary Mortgages Lenders Association, said that while lenders "might be able to clear their balance sheets of old debt", a lack of finance for new debt still remains.

He said that the SLS still does not include lenders who do not accept deposits, which prevents much of the mortgage market from moving their assets.

Since the intermediary sector comprises nearly 80 per cent of all new mortgages, he said, it is "madness" to stop it accessing the Bank's resources.

The Bank of England has denied that its SLS has had anything to do with the talks of a merger of Lloyds TSB and HBOS, the Financial Times has reported.

Extending the scheme gives banks a greater length of time to change mortgages for government bonds, the paper explained.