Intermediary Mortgage Lenders Association directors say the eurozone crisis is very different to the credit crisis of 2007 and should not lead to a similar contraction in mortgage lending.
The 2007 crisis caused a freezing of the wholesale markets and led to a prolonged credit crunch but Imla directors believe things are very different this time.
Speaking at the Imla executive briefing, chairman John Heron (pictured) said: “There is a stark difference between what happened in 2007 and what is happening now. In 2007, the capital markets closed and remained closed for some time.
“Here, we are in the most uncertain environment we could imagine and the capital markets are still open to UK lenders, which is a big difference.”
Imla executive director Peter Williams said: “We are in a very different place compared with where we were in 2007. Anyone who argues we are is wrong, although it is still serious.”
Home Funding chief executive Tony Ward said the pressure on banks to deleverage could lead them to prioritise lending to UK residential customers as it is seen as lower-risk.
He said: “Against the current backdrop, we are going to see banks writing less and deleveraging their balance sheets.
“But a more positive take on this is you are going to see some sort of switch to what is deemed lower-risk, core business, such as UK residential mortgages lending. I do not think it is all bad news and you should not see a straight read-across from deleveraging and that it is bad for the mortgage industry.”