Moneysupermarket.com comments on Bank of England mortgage lending figures

Commenting on the Bank of England figures showing mortgage lending is slowing, Louise Cuming, head of mortgages at moneysupermarket.com, said:

The Bank of England figures prove the mortgage industry is a shrinking market.

The lack of growth is bad news for both the mortgage market and the economy as a whole.

The credit crunch has made lenders increasingly risk averse with many withdrawing higher risk products e.g sub-prime loans and high loan to value (LTV) products.

We have also been in a rising interest rate environment and both these factors have dramatically constricted the market.

There will be two serious side effects from the slowdown in mortgage lending.

Firstly, high risk products were and cash cows and; offering the highest margin returns, so less involvement in this area will affect profitability.

Lenders are addressing this through higher pricing on traditional products, scaling back investment, and cutting staff costs.

andldquo;Secondly, consumer choice is being eroded as for some people there are few, if any, products available.

Also, what is open to them will come with a significantly increased price tag.

I fear we will start to see rising arrears and repossessions.

and;Ultimately the market will find its feet and lessons will be learned and; but they will be expensive and may take some time.

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