MBE 2012: Regulators are to blame for lack of lending
He said: “It is absolutely 100% the regulators’ fault through overacting and preventing the restoration of lending.”
Wriglesworth attacked capital and liquidity requirements of Basel III, labelling them “draconian,” and said they were holding back the lending that lenders wanted to do.
To illustrate his point he quoted recent LSL property data which claimed 97% of tenants aspired to own their own homes indicating the demand from first-time buyers is there but without high loan to value mortgages they were unable to realise their goals.
Capital requirement regulations on banks insist that a higher amount of capital is kept in reserve when lending out high LTV mortgages.
Wriglesworth said that for first-time buyers to get a foot on the housing ladder 100% LTV needed to come back and lenders should be allowed to offer it if they wished.
And he added: “If lending is to be restored we need to bring back sub-prime as a normal part of our business – mark my words it will come back.”
Ending his speech on government initiatives Wriglesworth reiterated how prudential regulation was too tight for lenders to make full use of the schemes like Funding for Lending.
He said: “No point loosening the belt if the braces are still on.”