In just nine months the once-thriving sector of mortgage lending has been brought to its knees by global investors losing confidence in mortgage-backed securities.
This has had particularly drastic consequences in the specialist mortgage market, in which a high proportion of business is handled by specialist lenders. These lenders, most of which distribute their products through packagers and brokers, depend on securitising their assets so they can’t continue to lend in the current situation.
Business closures and redundancies are rising among lenders, packagers and brokers and this is causing considerable hardship for thousands of industry professionals, many of whom work in small businesses. Meanwhile, potential mortgage customers without substantial deposits and those with poor credit histories are left stranded with no lender to turn to.
The result of all this will be unsustainable debt levels, high numbers of repossessions, growing homelessness, falling property values and problems with negative equity.
Does the government intend to do nothing while so many voters are being affected? With no end to the international credit crisis in sight, it’s time for you to look at what is happening at the grass roots and act to safeguard an industry that has been so effective and innovative in the past.
With a huge amount of demand for mortgages building up, healthy in-come streams and profit margins are available for lenders with money to lend.
It’s time to consider solutions to the problem that don’t depend on the market for global securities. For example, you could encourage the start-up and growth of balance sheet lenders by giving tax incentives to savers in these institutions.
You could also set up a centralised financial function that takes on assets that were formerly securitised. Brokers and packagers are not economics ex-perts – that’s your job.
We can no longer sit silently and watch as our industry is destroyed, with no emergency action being taken by those who have the power to make a difference. So please listen to the voice of small business and open a dialogue with the Council of Mortgage Lenders, the Intermediary Mortgage Lenders Association and the Association of Mortgage Intermediaries, together with the Bank of England and the Financial Services Authority.
If this industry is important enough to regulate, surely it deserves some urgent action to overcome difficulties that were created across the Atlantic by reckless lending practices that have never been part of our domestic scene.
If you took the time to meet industry representatives I’m sure you’d understand the situation better as well as the need for speedy action. I’d be happy to meet you to discuss the situation and I’m sure other industry leaders would be willing to join me.