Lenders must loosen criteria
Dominik Lipnicki, director of Your Mortgage Decisions, said rates are at a record low and what the market needs now is a change in attitude towards lending criteria.
He said: “Current lending criteria only works for clients with plenty of equity, impeccable credit history and guaranteed income.
“There are far too many borrowers who are stuck on their current standard variable rate and this problem will became even more evident once interest rates do start going up.”
Last week the Financial Services Authority released its long awaited Mortgage Market Review which provided brokers with more clarity on lending rules and saw the introduction of transitional rules to be implemented immediately to help customers trapped on SVRs.
Andrew Montlake, director of Coreco, said: “With the Mortgage Market Review rules set in stone so brokers finally know where they stand and when the Funding for Lending Scheme starts to have more of an effect I expect to see a gradual easing of not only product rates but also criteria.”
The relaxation of strict criteria which has been restricting the entry of so many mortgage applicants to the market cannot come too soon for Rachel Hales-Clark, director of ABC mortgage services.
She said: “In my view lenders need to get away from focusing on just repricing low LTV products. They need refocus on lending criteria and realise that if you have a great quality applicant with good earnings and they want to borrow 90% LTV then lenders need to recognise the real level of risk and offer well priced products at that level too.”