Vic Jannels, chairman of All Types of Mortgages, the mortgage distributor, has called for lenders to abandon their overly cautious approach in order to boost confidence in the market.
The total number of mortgage products available to borrowers has dropped by almost 50% since July last year, and since November 2007, almost a third of prime mortgage lenders offering mortgages at 100% LTV or more have withdrawn their products.
A number of balance sheet lenders are currently experiencing capital solvency ratios far higher than the FSA’s minimum requirement. AToM believes that, if more options are made available to borrowers, there will be a rise in both consumer and investor confidence, leading to increased investment in the mortgage market.
Jannels, says; “Many of the current rates offered by balance sheet lenders are acting as a deterrent to borrowers, as they are simply unaffordable. There is currently a distinct lack of competition within the market, and an increase in the number of competitive mortgage products being offered by balance sheet lenders can only have a positive effect.
“If there is a rise in confidence, we may see the number of securitised portfolios being purchased by investors increasing. This will ease the pressure on securitised lenders, and generate more competitive rates for borrowers.
Unless, of course, the balance sheet lenders are holding out for something a little more sinister. The total demise of the securitised lending sector, surely not?”