by Calculated Risk on 4/16/2008 07:19:00 PM

From The Times: Bank close to agreeing plan to end drought in funding for mortgages

It is understood that the Treasury is close to finalising a scheme under which the Bank would allow lenders to swap their mortgage-backed assets for government bonds rather than cash. Lenders would be able to use the gilts as collateral for loans from other banks. It is hoped that the move will ease the seizure in the credit markets and lead to a drop in mortgage rates for homeowners.