Bank of England extends scheme to boost mortgage lending

The Council of Mortgage Lenders has welcomed the announcement by the Bank of England that its special liquidity scheme is being extended until the end of January.

The scheme, which began in April, is designed to aid the short-term supply of funding to lenders. The scheme was due to end on 21 October and marks a u-turn by the bank.

Michael Coogan, CML director general, said: “In making a clear announcement today, the bank has shown a welcome flexibility to respond to difficult market conditions. Its action should help promote stability at a time of uncertainty, and we would urge the bank to continue to show flexibility, given that market conditions will remain challenging next year.

Earlier today Mervyn King, governor of the Bank of England, said: “In view of the current disorderly market conditions, the Bank of England is today announcing an extension of the drawdown period for its Special Liquidity Scheme to provide additional time for banks to plan their access to the scheme in an orderly fashion.”