A coalition of industry bodies has written an open letter to the Financial Times urging the Treasury to enact a market-led plan aimed at restoring confidence in the mortgage markets, to ease the lending freeze that is bringing the housebuilding industry to its knees. The letter, written collectively by members of industry bodies including the Council of Mortgage Lenders (CML), the Home Builders Federation (HBF), the Chartered Institute of Housing (CIH) and British Property Federation (BPF), puts forward a scheme devised by the CML, whereby the Bank of England would take on high quality residential mortgage-backed securities, in return for Treasury bonds or cash, in a bid to offer reassurance to the mortgage markets on a temporary basis.<br><br>The market-based mechanism would operate in such a way as to avoid dipping into public funding. “It would ensure that mortgage credit risk remained with lenders and investors,” the coalition pointed out in the letter. “It should help to improve the flow of funds available for lending to mortgage customers.” HBF economic affairs director John Stewart commented: “If the Bank was to take the step of offering temporary reassurance to the market, it could get the market moving again. <br><br>This could also help …