Until the hot and sultry sun of last week, BST this year seemed to stand for British Soggy Time rather than British Summer Time. The rain put paid to many hosepipe bans but it also increased the risk of floods.
Flooding has been a hot topic since 2008, when the insurance industry told the Government it would not be able to renew an historic agreement to provide cover for all but a tiny proportion of homes. If the Government and insurers do not come to an agreement by June 2013, things could get increasingly sticky for properties in high-risk areas.
And as Edmund Tirbutt reveals in this week's Lending Zone cover feature, that could be bad news for mortgage lenders. If they have to repossess homes in high-risk areas, they could find they are unable to sell them on if prospective buyers are unable to secure buildings insurance.
But Tirbutt explains that help could be at hand with the biblically themed Project Noah. Rather than ferrying lenders to safety two-by-two, it would provide a whole-of-market solution by making available Pounds 14bn of capital the via reinsurance market to reduce exposure to UK residential property flood risk.
Elsewhere in this week's Lending Zone, e.surv's business development director, Richard Sexton, reports on page 24 about turmoil in the wholesale markets and the impact this has had on funding mortgages.
Investors have been spooked by the indecisiveness and uncertainty in the eurozone, which has pushed up funding costs by a hefty 40 per cent.
Providing a sunnier perspective on things on page 25 is Brian Pitt, who discusses the results of a feedback report his company, Rockstead, conducted at the recent Brussels Asset-Backed Securities conference.
Despite the background economic situation, respondents were optimistic about the UK outlook, with 29 per cent expecting an increase in the trading of asset-backed securities.
"Lenders could find themselves unable to sell on repossessed homes in high-risk areas"
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