Darling in talks to beat credit crunch

Huddersfield Daily Examiner (Huddersfield, England), April 22, 2008

CHANCELLOR Alistair Darling will today meet mortgage lenders to discuss ways to help homeowners to survive the credit crunch.

The Bank of England yesterday unveiled a pounds 50 billion scheme to tackle the credit crunch by allowing banks and building societies to swap their riskier mortgage-backed assets for safer government bonds in a bid to kick-start crippled money markets.

Mr Darling told MPs he will meet the Council of Mortgage Lenders today to discuss the new scheme.

He added: "In the light of everything we are doing with them, I want to discuss with them how they can pass on the benefits of falling interest rates as well as wider Government support to mortgage holders."

Bank of England Governor Mervyn King said the new arrangement was necessary to boost liquidity, restore confidence in the banking system and "protect the rest of the economy" from the credit freeze.

Mortgage lending has fallen to historic lows since the start of the crisis last summer, with falling houses prices threatening a wider impact on the UK economy.

The Bank of England has slashed interest by 0.75% in the past five months, but many lenders have actually upped the cost of borrowing.