Crosby report into mortgage market will be a fortnight later as more time required to discuss September events

A crucial report that could kick-start Britain’s moribund mortgage market has been delayed by a fortnight so it can be updated to take September’s market turbulence into account.

The report by a committee led by Sir James Crosby, the former chief executive of HBOS and commissioned by Alistair Darling, is likely to address whether the Government should renew or extend the Bank of England's Special Liquidity Scheme (SLS) past January 2009 or guarantee high-quality mortgage-backed securities.

The Government has so far resisted intervention on the scale of the US government’s $700 billion (£380 billion) rescue package, although the Chancellor has said that the bailout will help the UK’s economy.

The Crosby report was due to arrive on Mr Darling’s desk on Tuesday but the deadline has been extended until the week beginning October 13th, according to Treasury sources.

The Treasury will make its contents public and probably before the Pre-Budget report anticipated in the next couple of months.

The Times revealed earlier this month that Alistair Darling is preparing to intervene to stimulate Britain's dormant housing finance market.

The interim Crosby report, published in July, was criticised by the property industry for not recommending enough decisive action on the mortgage market.

It predicted that the seizure in Britain’s mortgage market will persist for at least three more years.

The amount awarded for mortgages sank to a 16-year low in August, 12 per cent less than in the previous month, according to the Council of Mortgage Lenders (CML).

The SLS, which was introduced in April, allowed banks to swap mortgages issued before 2007 for Treasury bills which can used to raise funds in the market. One possibility before Sir James, who is also deputy chairman of the Financial Services Authority (FSA), is extending this to include any mortgages underwritten since 2007.

Industry bodies including the CML and the Home Builders Federation have urged this course of action.

However, Sir James also wrote in the interim report that it might be best not to intervene in the market at all and allow it to recover by itself. Mervyn King, the Governor of the Bank of England, is known to oppose widening the SLS, and has stated that it was aimed only at relieving financial stresses on banks and could not be used to boost mortgage lending. He has also gone on the record to say that the government should not back new mortgage securities.

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