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Bank boss warns on reckless rival lenders


The chief executive of Shawbrook Bank has criticised some lenders for reckless lending practices that are akin to “shutting your eyes and hoping for the best”.

Steve Pateman has hit out at slack affordability tests that do not sufficiently ensure borrowers can afford their loans once interest rates rise.

He told the Telegraph: “When you see people lending high loan-to-values and doing affordability tests on current payment rates, that is just crazy, it is like shutting your eyes and hoping for the best.

“The big challenge for the economy is that when things normalise, by which I mean normal interest rates and normal inflation, managing the debt burden that the UK currently has will require quite a lot of sensitivity and intelligence.”

Pateman said banks prepared to lend at 90 per cent LTV with fewer affordability checks were leaving themselves “exposed to interest rate risk in a pretty big way”.

He added: “That is why the Bank of England gets concerned, because they worry about loose lending. In that regard, they are right to worry.”

The Mortgage Market Review brought in tighter affordability rules for the owner-occupied sector, although there are currently no rules to govern buy-to-let lending practices.

However, the Bank of England’s Financial Policy Committee will soon be given powers of direction over the buy-to-let market, meaning it will likely be able to place caps on things like maximum loan-to-values and the rental coverage ratio if it deems it necessary.


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There are 2 comments at the moment, we would love to hear your opinion too.

  1. I take it Steve Pateman is looking for another job then. Using a double negative to make his point rather than allowing the reality of why rates would rise to encroach on his job application shows the sort of skills that any of the industry / tax payer funded, overpaid jobs place great value on.

    The Money Advice Service could do far worse and have.

  2. Seems out of touch as I do not expect there will be a return to “normal” rates and inflation. Bankers have ruined the economy, the genie is out of the bottle, so to bemoan other lenders in a highly regulated and ever complex market is ill informed and I expect just about getting his name in the press. Shame he does not have anything more insightful to say when there is so much geo-political and economic change afoot, almost like he has his eye’s closed to what is really going on and just hoping for the best.

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