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UK mortgage security scheme receives EU clearance

A UK government plan to inject significant life back into the mortgage-backed securities market has been cleared by the EU authorities under severe pressure from the UK government. The move will see around £50 billion of mortgage liquidity pumped back into the market in exchange for assets which will be used as collateral to increase liquidity.

The mortgage liquidity market and mortgage security market have been under severe pressure for some time as UK mortgage providers were forced to take significant hits regarding debt write-downs. As the UK property sector continued to fall they saw no requirement to increase their liquidity in the market place thereby exacerbated a problem which was already out of control. Hopefully the EU approved scheme will see significant funding pumped back into the market at a time when there are signs of increased confidence.

Slowly but surely the building blocks are appearing with many experts hopeful of a stabilisation in the UK property market later this year and move into positive territory next year. However, in the background there are a number of observers who believe the UK economy will still struggle for years to come, having to pay off substantial national debt and take on board significant tax rises which are expected in the short to medium term.

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