The Bank of England is considering accepting as much as €30 billion ($59.1 billion) in mortgages from banks as collateral for loans of government securities, which the banks could then use to raise cash, a person familiar with the matter said. The plan would go a step further than central banks in the U.S. and Europe by allowing banks to borrow for periods of a year or possibly more, said people familiar with the matter. Bankers have been lobbying the U.K. government for help as the markets they typically depend on to borrow money have all but dried up. Interest rates in short-term lending markets have shot up as banks, worried about failures among their peers, have become reluctant to lend to one another for more than a week. Meanwhile, the "securitization" markets where banks packaged and sold their mortgages to investors are all but shut: Investors bought only $10.4 billion in European mortgage-backed securities in the first three months of 2008, down 92% from the same period a year earlier. U.K. banks' heavy reliance on lending markets -- as opposed to depositors or other sources of funding -- has made the problem more acute. U.K. banks, for example, lack the range of options available to banks in the U.S., where institutions such as mortgage guarantor Fannie Mae and the Federal Home Loan Banks provide added sources of financing. Analysts note larger U.K. banks with diversified operations throughout Europe -- such as HSBC Holdings PLC, Barclays PLC and HBOS PLC -- can tap the ECB and other sources for short-term loans, but smaller banks -- such as Alliance & Leicester PLC and Bradford & Bingley PLC -- have fewer alternatives. The dearth of financing has forced mortgage lenders to cut back sharply, putting an end to a housing boom that had been a major driver of consumer spending. Even as the Bank of England has cut its short-term interest-rate target, rates on new mortgage loans have risen. In the three months ended February, new mortgage approvals for house purchases averaged only 73,000 a month -- the lowest level since mid-1995