Which first - the good news or the bad news?
In April last year we talked about the burden of debt repayment faced by the Banks that had tapped the Bank of England’s Special Liquidity Scheme. Launched in April 08 the SLS allowed Banks to swap illiquid assets (principally mortgaged backed securities) for government bonds thus easing their liquidity problems. However, repayment terms were 3yrs and we pointed out this would lessen Banks ability to lend to customers in the short term. Good news then as the CML reports its members have repaid all but £20bn of the £200+bn advanced. The bad news is that it is now the risk of sovereign defaults that is impacting Banks capacity to tap the money markets. If Credit Crunch 2 results then this cannot bode well for mortgage availability. Let’s hope the politicians can come up with a global solution! To end on a positive note Jaguar’s announcement it will build a new engine plant on the outskirts of Wolverhampton should provide at least some support for the local housing market.
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