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| Version 7 | Version 8 |
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| Lenders to discuss mortgage woes | Lenders to discuss mortgage woes |
| (2 days later) | |
| Chancellor Alistair Darling and Housing Minister Caroline Flint are to meet mortgage lenders later to urge them to do more to help struggling borrowers. | Chancellor Alistair Darling and Housing Minister Caroline Flint are to meet mortgage lenders later to urge them to do more to help struggling borrowers. |
| Mr Darling will ask the industry to find ways to prevent those in trouble from having their homes repossessed. | Mr Darling will ask the industry to find ways to prevent those in trouble from having their homes repossessed. |
| It follows his backing of a £50bn Bank of England plan to allow banks to swap mortgage debts for government bonds to help them during the credit crunch. | It follows his backing of a £50bn Bank of England plan to allow banks to swap mortgage debts for government bonds to help them during the credit crunch. |
| The global squeeze has made mortgages harder to find and more expensive. | The global squeeze has made mortgages harder to find and more expensive. |
| £50BN DEBT FOR BONDS SWAP Bank of England plan explained | £50BN DEBT FOR BONDS SWAP Bank of England plan explained |
| The rate at which banks lend to each other has been rising, which has seen banks toughening up their lending terms even though official UK interest rates are falling. | The rate at which banks lend to each other has been rising, which has seen banks toughening up their lending terms even though official UK interest rates are falling. |
| There is particular concern about homeowners coming to the end of cheap fixed-rate deals. | There is particular concern about homeowners coming to the end of cheap fixed-rate deals. |
| Many of them will face much higher monthly bills at a time when food and fuel costs are already stretching household incomes. | Many of them will face much higher monthly bills at a time when food and fuel costs are already stretching household incomes. |
| Figures from the Council of Mortgage Lenders last month showed the number of people whose homes were repossessed last year in the UK rose by 21% - the highest for eight years. | Figures from the Council of Mortgage Lenders last month showed the number of people whose homes were repossessed last year in the UK rose by 21% - the highest for eight years. |
| Swap scheme | Swap scheme |
| But after the announcement of the multi-billion-pound scheme to help banks with their liquidity problems on Monday, it is thought the chancellor may now feel it is time for lenders to pass that assistance on to customers. | But after the announcement of the multi-billion-pound scheme to help banks with their liquidity problems on Monday, it is thought the chancellor may now feel it is time for lenders to pass that assistance on to customers. |
| In a statement to MPs, Mr Darling said the Bank's intervention was necessary because money markets were not "functioning properly" and were beset by a "lack of confidence" despite billions of pounds in liquidity being pumped into the system. | In a statement to MPs, Mr Darling said the Bank's intervention was necessary because money markets were not "functioning properly" and were beset by a "lack of confidence" despite billions of pounds in liquidity being pumped into the system. |
| The measures, he said, would help alleviate the "increasing cost and declining availability of lending by banks and building societies". | The measures, he said, would help alleviate the "increasing cost and declining availability of lending by banks and building societies". |
| Under the plan, banks will be allowed to swap mortgage debts for government securities. | Under the plan, banks will be allowed to swap mortgage debts for government securities. |
| The swap scheme, starting on Monday, will be for a period of one year and may be renewed for a total of three years. | The swap scheme, starting on Monday, will be for a period of one year and may be renewed for a total of three years. |
| It will only apply to mortgage debts on banks' books at the end of 2007 and the swaps cannot be used to finance new lending. | It will only apply to mortgage debts on banks' books at the end of 2007 and the swaps cannot be used to finance new lending. |
| 'Improved liquidity' | 'Improved liquidity' |
| Michael Coogan, the director general of the Council of Mortgage Lenders, which will be attending the meeting with the chancellor on Tuesday, welcomed the Bank of England's move and said it would help with two things. | Michael Coogan, the director general of the Council of Mortgage Lenders, which will be attending the meeting with the chancellor on Tuesday, welcomed the Bank of England's move and said it would help with two things. |
| "Firstly, improve liquidity in the market, but that may mean more than £50bn over time. | "Firstly, improve liquidity in the market, but that may mean more than £50bn over time. |
| "Secondly, and importantly, restoring confidence in financial markets, which I hope will bring down the cost of the London Interbank Rate, which affects most consumers," he told BBC Radio 4's The World Tonight. | "Secondly, and importantly, restoring confidence in financial markets, which I hope will bring down the cost of the London Interbank Rate, which affects most consumers," he told BBC Radio 4's The World Tonight. |
| British banks have become increasingly unwilling to make loans, even to each other, as a result of the credit crisis, which was triggered by massive losses for banks involved in the US sub-prime mortgage market. | British banks have become increasingly unwilling to make loans, even to each other, as a result of the credit crisis, which was triggered by massive losses for banks involved in the US sub-prime mortgage market. |
| And many investors, concerned at what happened to sub-prime mortgages in the US, no longer want UK mortgage-based assets. | And many investors, concerned at what happened to sub-prime mortgages in the US, no longer want UK mortgage-based assets. |
| The disappearance of this market has deprived banks of tens of billions of pounds of finance for mortgage lending. | The disappearance of this market has deprived banks of tens of billions of pounds of finance for mortgage lending. |