High street banks made the adverse market look stupid

I was interested to read about TFC Homeloans’ prediction that specialist lending will return (Mortgage Strategy Online).

Sensible adverse lending was introduced in 1996 by Kensington. It only became stupid when high street lenders decided they liked the look of the huge profits and foolishly competed in the market on rate.

It’s not a rate-driven market, it never was and it never will be. It is criteria and risk-driven, which in turn dictates the rate, which in turn dictates demand. Thus it is a self-controlling market.

It doesn’t take a genius to work out how this sector fits into the overall structure and how to control it.