Speaking at yesterday's Mortgage Business Expo Manchester 2012, John Wriglesworth, Chairman of The Wriglesworth Consultancy suggested that all lending activity prior to the Credit Crunch was “justified including sub-prime” and the fault for the Crunch and the liquidity crisis lay beyond UK shores.
He also outlined the key factors needed to get any sort of housing/mortgage market recovery and the much-needed restoration of funding in the market. He also urged for the return of the securitisation markets in order to facilitate a market improvement.
Wriglesworth said pent-up demand in the first-time buyer market was out there “and if they could get hold of a mortgage then they would”.
Wriglesworth commented on the difficulties facing lenders:
“Lenders can’t lend in the right way to get the market going. Unless 100% mortgages and sub-prime comes back then you’re not going to see a healthy market. There is nothing wrong with 100% or cashback mortgages as long as lenders price for risk.”
He was also conscious of the capital adequacy problems facing lenders and said the new round of requirements was “Basel III meets Godzilla”. There was also little sympathy for the FSA.
He commented:
“The FSA is stifling the ability of lenders to offer mortgages to those that want them. It is a total over-reaction. What’s wrong with giving someone who is riskier an 8% mortgage [rate]? The FSA are not allowing lenders to do this because they don’t trust them.”
He also questioned the motives for brokers selling short-term products.
He said:
“Those selling two-year/short-term discounted products are mis-selling because you’re exposing borrowers to interest rate fluctuation in two years time.”
Finally, he did see some positives in the mortgage market:
“There is virtue in the fact that we are stable and we’re at the bottom of the market.”
