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Industry backlash over CML&#39s call for rate rise

The Council of Mortgage Lenders&#39 unprecedented call for the Bank of England to increase interest rates to stabilise the housing market has met with opposition from other sectors of the mortgage industry.

The Building Societies&#39 Association, intermediaries and lenders believe the onus is on the market to take a sensible approach if it feels the market is overheating.

CML figures for May show that mortgage lending has risen by 43 per cent to £19.5bn from £13.6bn in May 2001.

The trade body is arguing that a modest rise in interest rates sooner rather than later would avoid sharper rate increases in the future.

But the BSA says if lenders think the market is overheating, they can try to slow it down by reducing loan to value ratios or income multiples. Spokeswoman Rachel Blackmore says: “There is not necessarily a need for a rise in interest rates, lenders can do something themselves if they wish.”

Lenders such as Verso and national mortgage brokers including Charcol say a modest rise would not affect the housing market and a bigger rise would be detrimental to the economy.

Prudential national mortgage manager John Malone says: “Intermediaries can play their part by taking clients&#39 attitude to risk on board. The CML said in its response to Treasury consultation on regulating mortgages that there should be a reasonable payment for brokers advising clients not to take out a mortgage.”

Virgin One spokesman Scott Mowbray says: “It is a competitive market and the CML must let market forces take their place. Lenders do have underwriting systems in place to support their lending.”

•Lending hits record, p5

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