An Institute for Public Policy Research report argues that the Mortgage Market Review doesn’t go far enough. In particular the report hits out at the dominance of brokers in the mortgage market for exacerbating the boom.
“Intermediaries had a role in selecting from the booming array of mortgage products, but may also have played an important role in regulatory arbitrage finding the loosest lending for their clients,” the report says.
Brokers do not find looser lending but fit their clients’ aspirations to what’s available in the marketplace.
If lending institutions offer a particular deal that is favourable to clients we will offer it to them. We look at the array of mortgages, consider their terms including affordability and fees, and advise accordingly.
Before the crash some lenders offered massive income multiples, mostly to direct applicants, and this is what should have been addressed by the IPPR. If it had consulted with the brokers it has targeted, it would have seen who was to blame.
If it looked at high LTVs and salary multiples it would see that it was usually lenders’ direct lending that offered these terms not the brokers.
On several occasions I was unable to compete with direct lenders on loan amounts and LTVs.
As usual, we don’t have a voice and are used as a whipping post.
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