Government Offers Support To The Mortgage Institutions Of The Uk
Well we all are aware of the current situation in United Kingdom and the country
is really getting transforming in the finance industry with bulk of people getting culprit and the cost of lending is increasing and this lead to the decline in the lending activities and the bad or worst situation of the lender of the market. And looking into this and in order for betterment of the current scenario of the lenders the government has offered support to the money providers in order to make them constant and well versed. And this step taken by the government is good in the sense because now the money providing institutions will have enough capital within and it will improve their liquidity and make them more stable and trustworthy. At the annual discussion held of the Council of Mortgage Lenders in November 2012, Matthew Wyles said that UK should look for the UK version of the Fannie Mae or Freddie Mac which is a mortgage institution of US which is backed by government of USA. This institution would encourage lenders to offer higher loans to value (LTVs). Fannie Mae & Freddie Macc, both have been in the region for long time and both have their ups and downs. Both of these organizations have been sharing half of the total US mortgage market which is worth $12 trillion. The main role of these organizations has been to promote liquidity and immovability in the mortgage market by guaranteeing mortgages. These deals are then put together and sold forward to the investors. Apparently Fannie and Freddie have repaid the amount worth $45 billion of government funds used to shore them up. But their existing course of action is also discouraging lenders from selling their loans to the two US mortgage institutions. The UK government has already made demanding efforts to support the mortgage market. Mr. Wyles named the funding for Lending initiative as the good move, but disputably lenders are not providing loans at high LTVs because the risk adjustment are not enough. He said that the organization backed by government would reduce the risk and lenders would be willing to offer higher LTVs.
More or less this offers from the government to the lending institution of the country will not only do good for the lenders by making their position stable but also it will help countries current economical situation more stable than that is in current.