Council of Mortgage Lenders director general Paul Smee says the Independent Commission on Banking’s ringfencing plan is unlikely to hit lending levels or increase mortgage costs as long as access to wholesale funding remains available.
Speaking to Money Marketing in his first interview since taking over from Michael Coogan in August, Smee says mortgage customers should not be hit by the ICB’s likely final proposal as long as lenders are allowed access to the wholesale market.
He says: “I am not concerned about plans to ringfence banks’ retail operations, as long as it does not deny them access to funding from the wholesale markets. That will be the key.”
In April, the ICB outlined plans to ringfence the retail arms of UK banks in its interim report. It is set to publish its final plans next Monday.
CML figures published last month show buy-to-let advances in the second quarter reached £3.5bn with 32,000 loans, the highest figures since the last quarter of 2008 when BTL lending reached £4bn with 38,000 loans. Several commentators have suggested the BTL market will boom as lenders look to BTL to pick up the slack from subdued residential lending.
But Smee, who was the founding director general of Aifa, says: “The buy-to-let market will grow, but I do not think there will be a boom because a lot of the growth we have seen in the sector recently is due to remortgaging.”
First Action Finance head of communications Jonathan Cornell says: “The ICB should take into account how expensive the reforms will make mortgages and how it will affect lenders in accessing the wholesale markets but that is not its primary goal, which is to create a safer system.”