National Homebuyers: 'Bank plan criticised'

The Bank of England has launched a new scheme with the aim of easing the credit crisis, but website Fool has warned that the move will merely delay the onset of financial difficulties for many.

[ClickPress, Thu Apr 24 2008] Under the plans announced today (April 21st), banks will be able to swap their mortgage assets for UK Treasury Bills for a limited time.

However, Fool is sceptical and is concerned that the move will only cover over the cracks rather than fixing the problem.

This could lead to financial difficulties for many people in the future.

"The Bank of England's scheme to allow high-street lenders to swap mortgage debts for secure government bonds will only provide temporary respite for borrowers," said David Kuo, head of personal finance at Fool.

"Under the scheme, lenders can swap £50 billion of risky mortgages for government securities to help free up blockages in the mortgage market.

"However, £50 billion represents less than five per cent of total mortgage lending, and banks are unlikely to relax their recently self-imposed stringent lending rules," he added.

Julian King of National Homebuyers says, "We speak to tens of thousands of people every month who are already considering a fast property sale as the market is not favourable to them.

"Add the complexities and the uncertainties of the assets for bonds strategy and we fear more and more homeowners will simply want to cash in and achieve a quick house sale before the market potential plumges into undecipherable chaos.

"It's hardly surprising that this scheme has come under fire so soon".

Mr King is a director of National Homebuyers, the UK's leading quick property purchase firm. The company guarantees to make an offer to purchase any property in the UK for homeowners who need a quick sale.

Bookmark this release: Del.icio.us - Digg - Furl - Blinklist - Reddit