An emergency meeting has been planned for next week by the Chancellor Alistair Darling, between mortgage lenders and the government to come together and discuss the impending effects the credit crunch is having on the mortgage industry.

Banks and lenders have come under fire from the government for not passing on rate cuts to mortgage borrowers. Darling stated that, "What we are saying to banks is you have got to help people as well. If you can pass on those interest rate reductions, if you can help homeowners, help businesses, that will help all of us get through a very difficult time."

At the CML annual lunch on Friday Chairman Steven Crawshaw described the shock of how quickly the industry has been hit by unprecedented funding market conditions and warned that net lending in 2008 could only reach half of last year's levels. Crawshaw also went on to state that he was, “Also impressed by lenders’ speed of response and determination to continue to deliver mortgages to as many borrowers as possible - the vast majority who want one - within the constraints on our collective access to funds. We also continue to focus closely on managing the difficulties for those existing borrowers who may find themselves stretched in this new world order.”

The emergency meeting will undoubtedly force the discussion of the status of mortgage backed securities and how a stable model can keep the market’s equilibrium within a balanced position.