EXPO 2009: MMR overshadowing funding issues, warns IMLA
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The Intermediary Mortgage Lenders Association has warned that the Financial Service Authority’s Mortgage Market Review is detracting from urgent issues around mortgage funding.
Speaking at the Mortgage Business Expo at Olympia today Peter Williams, executive director of IMLA, argued that the industry needs to address the critical underfunding of new mortgages.
He says this is at least important, if not more so, than the issues outlined in the Mortgage Market Review.
Williams says: “There is a danger that we are becoming obsessed with the Mortgage Market Review, when actually the real issue is funding.
“The funding issue remains very significant, and we shouldn’t overlook that.”
Williams says that is likely that lenders will remain deeply conservative in their attitude towards new lending, with credit quality their biggest concern.
He forecasts that any increase in mortgage lending will be extremely slow in coming.
He acknowledges that there may be new entrants coming into the market but says that the volumes of business through these lenders will be relatively small.
Williams says that the FSA’s barriers to new entrants, as told in this week’s Mortgage Strategy, could prolong the funding shortage further.
He adds: “We could certainly do with a hungry overseas investor who wants to pump billions into the UK mortgage market.
“That may happen over time, but I think it’s unlikely in the short-term.”
Williams says that given the current tight affordability criteria, together with the shortage of funding, the industry could end up with a situation where certain borrowers are permamently excluded from home ownership.
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Readers' comments (2)
Stuart Duncan | 11 Nov 2009 3:59 pm
I think that they are right. I too am worried that the MMR is causing real uncertainty to existing and potential lenders, which can only prolong the current crisis.
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Ian Rogers | 11 Nov 2009 7:18 pm
WRT FSA blocking new entrants to the UK market. I would assume rightly or wrongly that these entrants are sub prime lenders, which is exactly what the market needs. Little or now thought has been given to this sector and when rates start to rise, it will be this very sector that needs the most attention, as there are no outlets for these customers at present. I suspect the FSA are suffering from the EMU affect in this contentious area.
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