The Bank of England dashed the hopes of mortgage lenders last week when it firmly closed the door on an extension of its Special Liquidity Scheme through which it provided term funding for mortgage bonds. Some £287bn of collateral was posted with the Bank during the SLS’s brief life in exchange for £185bn of funding with a term of up to three years. The vast majority of this is believed to comprise mortgage backed securities and covered bonds — some £242bn of which was issued but not placed with investors while the SLS window was open. So it is understandable that the Council of Mortgage Lenders would respond to the closure with warnings of a huge funding gap, backed up this week by Moody’s.