The Council of Mortgage Lenders |(CML) has welcomed the measures announced today by the Government, following consultation with the Bank of England and the FSA, to strengthen the capital position of banks and building societies, and to help re-open the market for medium term funding by providing guarantees of new debt issuance by eligible institutions.

The CML believes the steps address both relevant issues - funding and capital - and provide both the short-term framework to enable banks to raise finance, and the longer term strengthening of their capital position that should help to re-instil confidence and stability. It should also help to underpin consumer confidence that the tripartite authorities will actively manage the problems of the current downturn in the economy.

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The fact that both banks and building societies are eligible is also welcome. However, specialist lenders appear ineligible, so this scheme does nothing specifically to help them, other than through the indirect effect that improved confidence should create for the wider market.

CML Director General Michael Coogan said: "From what we can see so far, this seems to be a decisive, coordinated and reasonable package of measures that address both the relevant factors necessary to support a return to market stability. The flow of funding to support mortgage lending has been severely constrained, and these measures will help to create more positive conditions for the mortgage market."

(CD/JM)