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Lending could be constrained for next five years

Mortgage lending could remain subdued for up to five years as lenders grapple with a £300bn funding gap, a Council of Mortgage Lenders adviser has warned.

Speaking at the CML’s annual funding affordable housing conference in London today Rob Thomas, senior policy adviser at the CML, highlighted the severity of the sums to be paid back by lenders to the government and the Bank of England in exchange for access to funding over the last two years.

Thomas explains that £178bn worth of funding accessed through the Special Liquidity Scheme falls due 2011/2012, and a further £134bn from the Credit Guarantee Scheme which becomes due in 2012/2013.

He says: “How realistic is it to believe that retail deposits can be the source of funding to pay back the £300bn the government wants back?

“The answer is that retail deposits grew by about £60bn last year which suggests the simple arithmetic that retail deposits would take something like five years to repay those government funds and of course lenders don’t have five years.”

Thomas went on to say that the wholesale markets also offer little opportunity to repay the debts as even the boom securitisations accounted for £35bn of additional funding.

This would mean that it would take about nine years to harness the wholesale markets by enough to pay down their debt.

As lenders will be forced to pay back this sum over the next three years it inevitably means there is less money to lend.

Thomas adds: “All of this is going to mean that lenders are going to be restrained for possibly the next five years. The next few years are going to be quite difficult.”


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  • Paul 13th May 2010 at 10:12 am

    Bobby what would be the figure you describe as a pittance? Broker incomes are obviously down from the boom days but this will not last forever. Plenty of people have had incomes reduced dramatically, with many people still unable to find work whether it be for a fortune or a pittance. If the industry treats you so badly why are you still in it? Probably because there are no jobs elsewhere.

  • Bobby 12th May 2010 at 5:40 pm


    We only need to hang until 2015 and it will be Champagne and Cakes again.

    How many brokers can survive 2010 let alone earn a pittance until 2015 ?.

  • Glenn Peniston 12th May 2010 at 3:34 pm

    Im with Anonymous 3.12pm we need to stay positive there will always be a need for brokers the new TMW 80% ltv deal is a prime example this week of good news and a product that as far as I am aware is not available direct to the public.

  • Paul 12th May 2010 at 3:12 pm

    Whilst people are intent on concentrating on bad news and predicting doom and gloom can we not take a step abck and look at the bigger picture. Yes the big boys seem determined to cut out brokers and restrict lending but this will not last. We should be lookin gto the positives such as the relaunch of Kensington as a lender, a lender who deal only with brokers as is the case with I Group, and Aldermore when they launch which is imminent. These will be the first of many lenders I suspect for whom credit scoring and direct dealings will not enter their minds. The big banks are trying their best to retain funds rather than lend them at present and it is much easier to decline a case to a member of the public than to a broker as their pathetic excuses will wash with them. Brokers will be around for a long time yet, although it may be much harder work than in the past. I for one am happy to get my head down and work through this as there will be better times ahead, and I do not think it will take much longer. Lenders need to lend, and the intermediary channel will still be there for them when they choose to use it. The control is with the lenders currently, but this was not the case in the past, and will not be in the future.

  • Bobby Welsh 12th May 2010 at 3:05 pm

    Lets all just hang up our boots and let the market disappear. The whole point in our job is to guide, sdvise and arrange. Is it now better that the blindefolded client does it for themselves and further ruins their credit rating by applying for mortgages they would never get in the first place? SHEESH!!!

  • Mike Fitzgerald 12th May 2010 at 2:44 pm

    I agree with Rob Thomas that mortgage lending is going to be subdued for up to 5 years.
    In addition to this some lenders are imposing such impossible credit scoring criteria on 85% deals from brokers and this is going to hurt mortgage brokers a lot.

  • john higgins 12th May 2010 at 2:37 pm

    It’ll be alright. Lenders will then be able to legitimately increase the amount they are lending direct to finally kill off the intermediary market. When are lenders going to stand up and actually say they dont want brokers to survive??

  • Robin Banks 12th May 2010 at 2:05 pm

    Is there any good news? there must be some somewhere!!