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We need to talk about lenders deleveraging

Looking at gross lending predictions from the Council of Mortgage Lenders and Intermediary Mortgage Lenders Association, it is clear they are not expecting this year to be too different to last.

Bob Young

Indeed, with forecasts of between £130bn and £133bn, we might be forgiven for thinking that 2012 is unlikely to be described as the year of the mortgage loan.
The mortgage market looks set to be flat at best, with perhaps some niche areas continuing to perform.

However, if mortgage lending is not to be the core part of our market in the coming months, what will?

We could see more focus from lenders on deleveraging their books. Indeed, some would say that certain major banks have little option but to deleverage and take away some of the risk they hold.

How these institutions go about deleveraging is a moot point and there is certainly a lack of quality expertise around the best methods and processes to do this.
Some lenders have made rather piecemeal attempts to deleverage in the past by offering existing borrowers sizeable discounts to move elsewhere.

But this approach has provided little in the way of tangible success, especially in the home loan sector. There are several reasons for this.

Specialists like Tony Ward, chief executive of Home Funding, are likely to lead the way. But we also need a wider debate about deleveraging and how lenders and advisers can support it. The time for debate has certainly arrived.


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  • Mary Lockyer 6th February 2012 at 10:48 am

    Lenders may want to deleverage, but tha fact is there are vast numbers of borrowers who no longer fit the revised income multiples and affordability calculations, and I am not talking about self certified mortgages, millions of borrowers are trapped with their existing lender, and cannot afford to move up, and are probably reluctant to move down with the costs of moving eating further into their capital, seems we have made an apple pie bed, and both borrowers and lenders will end up sleeping in it together, whether they like it or not.