The Council of Mortgage Lenders is considering drawing up shadow credit ratings for up to 50 housing associations.
This would help it gauge the effects of changes to the way banks view the riskiness of the sector.

It is hoped the dummy ratings would help convince the Financial Services Authority 鈥� the body which regulates Britain鈥檚 financial institutions 鈥� to press for RSLs to be exempted from changes to international banking practice.

The influential Basle Committee is considering recommending changes to the amount of money that banks must set aside in order to cover their loans. Banks who lend to housing associations currently have to set aside half the total value of the loan. Under the proposals, this could rise to 100% in 2007. The extra cost would be passed on to RSLs.

Council of Mortgage Lenders deputy director general Peter Williams said: 鈥淎 feasibility exercise is currently being discussed.

鈥淚t will only be worth doing if the FSA would be persuaded by our evidence and they have encouraged us so far.鈥�

Source

Housing Today