MPs Accuse Lenders of Being Too Cautious
The Council of Mortgage Lenders has defended its members against MPs’ accusations of being over cautious with mortgage lending. Some MPs have said lenders are hoarding cash while the market sorts itself out.
MPs have accused mortgage lenders of being over cautious with regard to mortgages and harming the chances of market recovery.
In response the Council of Mortgage Lenders has defended its members, saying that, although they wished to help the ailing housing market and especially first-time buyers, they had to consider the risks of offering risky incentives to would-be buyers.
Meanwhile the mortgage squeeze continues with property sales at a 30-year low.
Prime Minister Gordon Brown said on Monday, that demand for housing in the UK remained high, but there were not enough mortgages at the right price.
Chief economist at Morgan Stanley UK, David Miles, said it might take further falls in house prices of between five and 10% before the market stabilises and picks up again. The former government advisor and current director at the Financial Services Authority admitted this was an educated guess, but felt that such a fall was required before people began to return to the market.
Banks and building societies have cut back their mortgage lending in the current financial turmoil, but MPs accused them of hoarding cash to boost their own bank balances, while letting the market determine how far house prices should fall. MP George Mudie said they were letting their industry fall apart and appeared unconcerned. He added that the Government guarantee to underwrite £250bn of inter-bank lending should get rid of any excuses for not lending and kick-start the market into action.
Nationwide’s latest figures show that house prices are falling faster than at any time since the early 1990s. The Royal Institution of Chartered Surveyors said that the price fall and reduction in sales made this a worse housing crisis than the ‘90s. However, a recent rise in the number of buyer enquiries was a glimmer of light for the market.
