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Are the money markets starting to thaw?

The Council of Mortgage Lenders (CML) has today confirmed that there has been an easing in money market rates as more investors begin to come out of the woodwork. For the first time since the credit crunch began we are starting to see major institutions securitising home loans which will in turn increase liquidity and money available via the money markets. Despite the fact that mortgage lending in September increased by just 2% to £12.5 billion, many mortgage lenders are hailing this as a potential turning point.

It is no secret that the UK money markets have been difficult since the credit crunch began with rates remaining relatively high compared to UK base rates. However, if we are starting to see major institutions securitising their loan portfolios again then we will see an increase in liquidity which should bring rates further down. This would be the perfect scenario for recovery in the UK property market although not all analysts and investors are as positive for 2010.

An easing of rates in the money markets is the first step towards a significant recovery in mortgage liquidity across the UK but this is a situation which will not change overnight and will be gradual.

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