CML backs cautious lenders

The Council of Mortgage Lenders has rejected Vic Jannels’ call for lenders to abandon their cautious approach to business.

Last week, the chairman of All Types of Mortgages said lenders should throw off the shackles and reintroduce affordable deals to build consumer confidence in the mortgage market.

He says: “Many of the rates offered by balance sheet lenders are acting as a deterrent to borrowers as they are unaffordable.

“There is a lack of competition in the market, so an increase in the number of competitive products offered by balance sheet lenders can only have a positive effect.”

But the CML says Jannels’ comments fail to consider the funding constraints lenders continue to face.

A spokeswoman for the CML says: “Jannels is overlooking the fact that lenders have to do what is vital for their businesses. Wholesale markets remain closed, which restricts their ability to lend. Funding is available in smaller tranches and it’s being snapped up quickly.

“Lenders are simply responding to rapidly changing conditions by adjusting their product lines and pricing to match their funding.”

But Jannels argues that if there is a rise in confidence, the number of securitised portfolios being purchased by investors may rise. He says this would ease the pressure on securitised lenders and generate more competitive rates.

But he adds: “Unless, of course, balance sheet lenders are holding out for something more sinister such as the demise of securitised lending.”

Matthew Wyles, group executive director of non-retail business at Nationwide, says: “The same forces stopping securitised lenders are affecting balance sheet ones.

“It’s not a conspiracy, it’s economics. When massive demand meets limited supply, tightening criteria and rising rates are the result.”