Bread and butter lending stuck

Gemma Harle is managing director of TenetLime

Go back two or three years and the principal problem facing mortgage lending was the dysfunctional wholesale funding markets. These persist but, at first glance given, the plethora of 95% LTV products now available (albeit at eye-watering rates) and the growing number of products in general, and you might be forgiven for thinking a return to something approaching normality is on the horizon.

Certainly the arrival of lenders like ING  in the intermediary space, the renewed emphasis on service, and willingness to do business is welcome. In some quarters the growing concern is that consumer confidence may soon be the industry’s primary concern. Despite the dripping tap of better news growth is elusive. Certain niche markets such as buy-to-let are booming but the bread and butter residential lending remains stuck.

The implementation of the fiscal policy cuts in the Comprehensive Spending Review are hurting. Home movers of all types remain wary of a housing market that promises no imminent returns especially when job markets feel so unreliable.

But in their haste to make profitable lending once again, lenders need to address the rates that accompany these 90- 95% LTV products. House moving is the dynamic our economy requires. Given the fact that the pain is being deliberately delivered through fiscal rather than monetary policy, there is no point waiting for a rise in interest rates to drive a remortgage boom - that I think we are all agreed is a long way off.