He claims that to carve a niche for themselves, new lender entrants in 2006 and 2007 brought with them “innovative approaches, not all of which were sound”.
He says: “If you increase supply when you have finite demand, what gets driven down is not just pricing and margins but lending standards too. To differentiate themselves, new lenders started to relax their lending criteria.”
Wyles says the fact that now-defunct lender Advantage released a sub-prime product that was so competitive it entered a prime best buy table was an indication that the market had lost its way.
He adds: “Some pricing made no sense. The Advantage product in the best buy table was the peak of the lunacy.”
The industry stalwart claims relaxed criteria left the UK vulnerable to the problems that hit the US market.
He says: “Much of the loosening of standards originated in businesses founded by US investment banks and we’ve seen what happened to their market.
“If the credit crunch had not occurred lending standards here may have drifted into decline.”
Ray Boulger, senior technical manager at John Charcol, says: “There is no doubt new lenders played a part in loosening credit criteria but existing lenders didn’t have to follow suit.”
Wyles predicts it will be some time before the credit crunch storm passes.
He adds: “The market is not going to return to pre-crunch days. One should never say never as all markets operate in cycles but we should not underestimate the damage that has been done.
“It will take a generation to recover. Anyone who thinks the crisis will be over this year or that we’ll see the return of plentiful lending is smoking opium.”