Cheaper Mortgages? No Chance ; Experts Warn [Pounds]50bn Rescue Will Do Little to Ease Suffering

Summary

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THE [pounds]50 billion mortgage rescue package agreed last week by the Bank of England will have a negligible effect on mortgage rates - and will do virtually nothing to help borrowers exposed to the dangers of negative equity and shock increases in rates, warn mortgage commentators.

Bank Governor Mervyn King unveiled the bail-out with the aim of ending paralysis in the mortgage markets. Under the scheme, banks will be able to swap their existing mortgage loans for Government bonds, which they can then trade on financial markets to raise desperately needed cash.

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Extract

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Cheaper Mortgages? No Chance ; Experts Warn [Pounds]50bn Rescue Will Do Little to Ease Suffering

In theory, this would improve liquidity and spark a return to competitive mortgages and less stringent loan terms.

But mortgage market watchers doubt it will translate into lower rates and more deals...

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