LONDON – Proposals for the reinvigoration of the UK mortgage industry have been made by trade body The Association of Mortgage Intermediaries (AMI). The AMI white paper Fixing the Crunch: Steps toward a remedy for the mortgage market’s credit crunch, gives causes of the current market turmoil from a mortgage industry standpoint, the credit crisis’ impact on mortgage firms, and proposals for the UK mortgage market.
The first possible option is to find alternative sources of funding – especially making overtures to sovereign wealth funds to attract attention to the UK mortgage market. Sovereign wealth has so far been a major provider of capital to the struggling US investment banks.
The second is for the Bank of England to provide more liquidity. It could also relax its criteria for bank borrowing. In a separate publication the AMI welcomes the central bank’s liquidity measures rolled out for UK banks earlier this week.
Third, a new “gold standard” could be created for mortgage-backed securities (MBS) to address issues of market confidence, drawing on an asset mix taken from a variety of securities. The AMI encourages the National Debt Office or the Bank of England to manage MBS non-tradable assets.
Last, a reselling of MBSs to their traditional buyers, with a reinvigorated engagement aimed at getting investors to reconsider the market is suggested.
The week on Risk.net, July 7-13, 2018Receive this by email