The European Commission gave its approval Tuesday to the U.K. government to guarantee $74 billion of residential mortgage-backed securities, in order to facilitate banks' mortgage lending.

The guarantees are part of an overall U.K. strategy to support the banking industry during the financial crisis; they have become necessary due to adverse developments in the U.K. housing market as a consequence of the credit contraction, the commission said.

Under the plan, investors can buy government-guaranteed securities backed by residential mortgages, which are issued by special purpose vehicles sponsored by U.K. banks and building societies with substantial business in the United Kingdom, the commission said.

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