Government told to stop criticising mortgage lenders

Continuing criticism by the Government of mortgage companies for ‘irresponsible lending’ could lead to a crisis in confidence by consumers, the Council of Mortgage Lenders (CML) has warned.

Director General of the CML, Michael Coogan, said: “The Chancellor’s continuing comments suggesting a lack of responsibility are not helping the reputation of the financial services industry. He is creating an environment where customers could lose confidence and that is wholly unnecessary.”

Coogan says that the problems at Northern Rock have already given financial services a bad name in the UK and damaged their wider reputation in Europe, and he would like the Government to help restore trust in the mortgage industry, rather than continue the messages of doom and gloom, which will lead to distrust.

All mortgage providers have revised their lending criteria and tightened up on processes. The days of carefree lending have gone.

Coogan wrote to Chancellor Alistair Darling on 28 September asking for a meeting to discuss mortgage industry issues, but is annoyed that he hasn’t yet received a reply. “I am angry that he hasn’t explained to the industry what they should do differently,” he said.

Coogan has the interests of mortgage companies at heart, but is frustrated at ongoing criticism without constructive comment. He warns that it is in the interests of consumers for the mortgage market to remain healthy so that lenders continue to develop innovative products. Recently there has been a withdrawal of 40% of mortgage products which will in no way benefit consumers.

Coogan also warns that levels of arrears and repossessions will probably rise in 2008, as many people will be coming off fixed rate deals this autumn. Coogan suggests that the Government should strengthen its support scheme for homeowners who get into difficulty, saying: “The number of people who are going to need help will increase.”