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Mortgage lenders attack the UK government

The confirmation that mortgage business fell by 60% to an eight year low last month has prompted a vicious attack on the UK government by the mortgage industry. The mortgage industry leaders believe that while the UK government has hit the headlines with demands that liquidity is increased, their position is being constantly undermined by the National Savings and Investments company which is offering significantly higher savings rates than those available on the UK high Street.



With the worldwide money markets still struggling, UK banks are depending more and more upon customer savings to fund their operations on a daily basis. However, they have seen a significant amount of funding removed and placed with the National Savings and Investments company, thereby weakening their position and their ability to increase liquidity in the mortgage market. So what next for the UK mortgage market?



UK mortgage lenders are stuck between a rock and a hard place, unable to increase savings rates which would attract more funding and also unable to increase liquidity in the mortgage market because of reduced savings. Quite how this dilemma will pan out in the long term remains to be seen but the longer the property market is starved of vital capital the longer the UK recession will last.

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