Yesterday's move by the Bank of England is likely to ease pressure on Britain’s 59 building societies. Financial Times
Britannia, Nationwide and Yorkshire have all performed securitisations into the bond markets in the past and will therefore be able to tap into the Bank’s special liquidity scheme. In addition, some mutuals may be able to pledge residential mortgage-backed securities that they bought in the past and turn them into more liquid Treasury bills.
The prime minister was warned last week that mutuals could be forced from the mortgage market, leaving only a handful of large banks to offer new loans to customers. In recent weeks some lenders have pulled out of mortgage lending or pushed up their rates, leaving smaller mutuals to be swamped with huge volumes of new applications. As a result, some mutuals have restricted their mortgage lending.