A top regulator has warned lenders against a “race to the bottom” in the face of growing competition in the mortgage sector.
Speaking at the Association of Short Term Lenders annual conference Lynda Blackwell, mortgage sector manager at Financial Conduct Authority, said lenders were now in a position where they would have to diversify to maintain their place in the market.
According to the FCA the market has seen a 10% increase in new lenders of late whilst 75% of business goes to the top six lenders.
She said: “We are likely to see lenders diversify into other areas and target the under-served. We are already seeing loan-to-values creep up and the return of interest only products.
“Increasingly we are also seeing an increased tolerance to borrowers with historic payment issues or those who are sub-prime.
“We do not want to see a race to the bottom.”
Blackwell was speaking at the ASTL conference at Painters Hall, London.