Bank of England governor Mervyn King's comments last week on the precarious state of the property market have split the mortgage industry.
Though many brokers feel King's comments were a risky attempt to instigate a house price plateau, an increasing number welcome his opinions.
Andrew Frankish, operations director at Mortgage Talk, heralds the remarks as “bringing some much needed realism into the market”. Frankish echoes the sentiments of other brokers who feel the governor's comments have been misconstrued or exaggerated.
He says: “King did not say there would be a price crash. He said there are early signs of a slowdown. As brokers we would be happy to see stability return to the market.”
And John Mawdsley, director at Merseyside-based The Mortage Partnership, reasons that the current panic is just part of a cycle.
He says: “Since the early 1970s, periods of rapid house price increases have been followed by periods of readjustment. Stretched affordability and rising interest rates are hallmarks of this trend.”
King followed up his initial warning with a second last Wednesday, saying the UK economy didn't have much “spare capacity”, meaning that inflationary pressures would continue to build.
And caution is being urged by many in the industry. Christopher May, director at The Mortgage Times Group, says: “It is highly improbable that the market can sustain this growth. The mortgage market will slow within 12 months.”