Date Published 25 May 2012
Lenders need to return to pricing for risk and there needs to be more 100%, cashback and sub-prime mortgage product availability if the mortgage market is to return to any sort of health.
John Wriglesworth, chairman of the Wriglesworth Consultancy, the PR firm specialising in the mortgage and housing markets, was speaking at tis week`s Mortgage Business Expo Manchester 2012.
Wriglesworth, who organises the much-praised Great Housing Debate each year in Westminster, defended lending activity prior to the credit crunch, saying all of it, including sub-prime, was justified.
He said that the reasons for the crisis lay beyond UK shores.
He also said pent-up demand in the first-time buyer market was out there ‘and if they could get hold of a mortgage then they would’.
Wriglesworth added: `Lenders can’t lend in the right way to get the market going. Unless 100% mortgages and sub-prime comes back, then you’re not going to see a healthy market. There is nothing wrong with 100% or cashback mortgages as long as lenders price for risk.`
He was also conscious of the capital adequacy problems facing lenders and said the new round of requirements was ‘Basel III meets Godzilla’.
He hit out at the Financial Services Authority, saying: `The FSA is stifling the ability of lenders to offer mortgages to those that want them. It is a total over-reaction. What’s wrong with giving someone who is riskier an 8% mortgage [rate]? The FSA are not allowing lenders to do this because they don’t trust them.`
He also questioned the motives for brokers selling short-term products. He said: `Those selling two-year / short-term discounted products are mis-selling because you’re exposing borrowers to interest rate fluctuation in two years’ time.`
Wriglesworth concluded: `There is virtue in the fact that we are stable and we’re at the bottom of the market.`