Investment Property News - Bueno Investments Limited

The Bank of England has unveiled a £50 billion rescue package for banks hit by the credit crunch.

The move will see banks able to swap their riskier mortgage-backed assets for Government bonds to shore up their finances.

"The scheme aims to improve the liquidity position of the banking system and increase confidence in financial markets," the Bank said.

Since the credit crunch erupted last year, banks have suffered from a crisis of market confidence in bonds secured on mortgages, due to rising defaults among high-risk "sub-prime" borrowers in the US.

This has hit banks' ability to raise funds and made them more cautious over lending to each other - leading to more expensive mortgage deals for homeowners.

The Bank said: "Financial markets are not working normally, which if left unchecked will have an impact on the wider economy. Across the world, there is a lack of confidence in assets created from packages of bank loans, most notably mortgage-backed securities."

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