The Bank of England (BoE) is close to finalising the terms for an intervention in the mortgage market after leading bankers warned the government over the growing strain on small lenders, the Financial Times reported.
The paper, citing people familiar with the proposal, said the plan would see the BoE swap UK mortgage-backed securities for government loans for a period of one to three years.
It said the proposal still needed government approval and BoE would not accept mortgages agreed after end-December 2007.
“We are discussing a plan under which the credit risk would remain with the banks, but none of the detail has been fixed yet,” a BoE spokesman said. BoE Governor Mervyn King said he was talking to banks about a solution to the credit crisis. (Reuters)
BoE to finalise mortgage terms shortly