The Government earlier this week set out a package to inject £100 billion into the banking sector.

The problem up to now has been the lack of desire for banks to lend to one another. This in turn has caused a severe lack of available funds from lenders, making mortgage finance very limited. To deal with this banks have therefore been extremely choosy has to who they lent money to, and have tended to lend only to the safest of borrowers, i.e. those with a significant deposit. This has made it very difficult for others to have access to funds at anything like a reasonable rate.

This latest bail out by the Government should improve the amount of funds available. The government has also made banks promise to increase the amount of lending they are doing.

Will it work?

At this stage the details of the available funding are too limited to be able to assess the impact with any certainty.  But it is the next step in trying to cause the problems that lack of liquidity has caused.

This entry was posted on Wednesday, January 21st, 2009 at 10:49 am and is filed under finance general, mortgages. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.