The U.K. government is planning on introducing a system where it endorses the best-quality U.K. covered bond and RMBS pools. This move is aimed at increasing transparency and improving investor confidence, thereby boosting lender liquidity.

Given the financial turbulence in the global markets, Chancellor of the Exchequer Alistair Darling said at last Wednesday's annual budget address that the current conditions in these mortgage funding markets are extremely difficult. He said it was imperative that lenders have access to stable and low-cost funding to enable mortgage rates to decline.

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