Balance sheet mortgage lenders, such as major banks and building societies, should abandon their overly cautious approach to lending to increase confidence in the market, according to All Types of Mortgages (AToM).
Managing director of AToM, Vic Jannels, says many balance sheet lenders have capital solvency ratios far in excess of FSA requirements and should use this to boost the market.
According to AToM, the total number of mortgage products available has fallen by 50% since July 2007, while a third of prime lenders have withdrawn products offering 100% LTV or more.
Jannels believes that if balance sheet lenders were to increase the product ranges they offer, then consumer and investor confidence in the market will rise and lead to increased investment in the mortgage market, providing a boost for all lenders.
“Many of the current rates offered by balance sheet lenders are acting as a deterrent to borrowers, as they are simply unaffordable,” he says.
“There is currently a distinct lack of competition within the market, and an increase in the number of competitive mortgage products being offered by balance sheet lenders can only have a positive effect.”
A rise in confidence will result in more investors buying securitised portfolios, according to AToM, and would allow securitised lenders to offer more competitive rates to borrowers.
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