Mortgage industry strong despite credit crunch

Wednesday, 07, May 2008 11:18

The mortgage industry has remained robust despite the ravages of the credit crunch.

According to the Council of Mortgage Lenders (CML) annual report, homeownership remains overwhelmingly the tenure of choice for Brits in 2007, despite the liquidity crisis.

Seventy per cent of the population remain owner-occupiers of their property, with the majority fulfilling their aspirations with the help of mortgage finance.

Over the course of the 2007, CML members lent a record £364 billion to borrowers - £1 billion a day - and almost six per cent more than the £345 billion achieved in 2006.

This comes despite "seismic events"; the collapse of the lender Northern Rock and subsequent crisis of confidence in the whole UK banking industry.

While fears the government could have taken disproportionate action to counter the adverse political and economy impact of these events, the CML argues no such action was necessary.

"After the summer, there was a heightened risk of inappropriate intervention by politicians, as well as by the regulator," said the CML in a report.

"At the end of the year, we responded quickly and firmly to the chancellor's suggestion that lower mortgage rates were 'part of the deal' following a cut in rates by the Bank of England's monetary policy committee.

"The reality is that mortgage rates continue to reflect a wide range of factors, particularly the cost of funding and business margins in a competitive market, and not just the rate set by the Bank."

However, these fears have not materialised, claimed the report.

Chris O'Toole