Hope that SLS will lead to reduced mortgage interest rates

The Bank of England's Special Liquidity Scheme (SLS) has the potential to make a real impact on the UK mortgage market.

According to the Council of Mortgage Lenders (CML), if the scheme is widely used then borrowers will begin to see an impact.

The Bank of England announced that £50 billion worth of Treasury Bills will be made available to lenders.

Banks will be able to swap their mortgage assets for the bills for a limited time.

It is hoped that this will ease the credit crunch and should lead to reduced mortgage interest rates.

Michael Coogan, director general of the CML, said that he is hopeful the SLS will have a positive impact.

"If it is used widely, as I expect it to be, and extends to over £50 billion in asset swaps by banks and building societies, we think that some of that money will be recycled responsibly into the mortgage market," he commented.

A number of lenders have reduced their mortgage interest rates in recent weeks following a cut to the base rate of interest.

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