Sub-prime legislation could deter lenders

Author: Lynann Butkiewicz | Published: 20 Dec 2007

A bill in the US to make mortgages easier to pay could deter banks from lending, at precisely the time when central banks are trying to increase liquidity. It could also be another blow to securitisation.

In response to the sub-prime mortgage crises, the US House of Representatives passed legislation last month requiring lenders to issue loans that are easily repayable by borrowers. While some consider this a helpful aid to borrowers, others fear it will hurt lenders and bring greater complications to the market.

"The last...