Finlay voices concerns over repayment vehicles
Referring to an earlier speech by Martin Wheatley, who said that lenders would not be responsible for the performance of repayment vehicles, he said: “So who will and where does the buck stop?
“I have a fear that the buck will stop with the lender because it is the biggest and easiest target. There is more water to go under this bridge.”
These concerns follow Barclays’ decision this week to place a minimum loan of £300,000 on applications for an interest-only mortgage.
Finlay said that part of the reason for this change in policy was because they had seen a real increase in the volume of interest-only mortgages coming its way.
Finlay’s comments on interest-only were part of a wider debate, chaired by the director general of the Council of Mortgage Lenders’ Paul Smee.
Also on the panel was Ian Andrew, managing director of intermediary sales at Nationwide Building Society, Pat Bunton, operations and compliance director at London & Country and Stephen Smith, director of housing at Legal & General and joint deputy chairman for the Association of Mortgage Intermediaries.
Andrew said that Nationwide’s decision to pull out of the interest only market was based in some part on the uncertainties of the future raised by Finlay.
And although he said he would never completly rule out a return to interest only, at the moment, Nationwide were happy to stay out of that market.
Smee predicted a gradual comeback for interest only in the future.
He said that regulation always starts with an over reation resulting in the amount of interest only mortgages being sold sliding right down the scale but he anticipated that this would at some point “swing back” and the market would gradually see an increase in the number of loans being sold on interest only.