The trade body’s mortgage funding specialist Jon Saunders said the cost of funding from other sources had fallen since the introduction of the scheme.
“We do not believe that the withdrawal of the FLS represents a threat to an adequately-funded mortgage market,” he said.
“Wholesale funding is now much more robust than it was in the years 2008-12, supported by an increasing risk appetite from investors, particularly from those “hunting for yield” in a low interest rate environment. Alongside more buoyant wholesale markets, we continue to have a very strong market for retail deposits.”
Writing in the CML’s latest News and Views bulletin, Saunders also predicted the return of the market for residential mortgage-backed securities (RMBS) in the next 12 months.
“In the first weeks of this year we have seen a number of firms take advantage of favourable market conditions to issue both covered bonds and senior unsecured debt in a variety of currencies and maturities. We also expect issuers to use the RMBS market in the first quarter of this year.
“Obviously this increased supply may put some upward pressure on the cost of borrowing in order to tempt more investors into the market. But most commentators seem to believe that there is a sufficient overhang of demand from investors for an increase in supply to be absorbed without any significant adverse effect on the cost of borrowing.”
