Lenders have slammed Prime Minister David Cameron’s claims that they are holding back the housing market by lending too cautiously.
Last week, Cameron called on lenders to return to “respectable” lending to get the housing market moving. Building Societies Association head of mortgage policy Paul Broadhead says the Government cannot criticise lenders for being more prudent after it has openly condemned them for lending irresponsibly in the past.
He says: “Banks and building societies are lending to people they think are a good risk and I do not think anyone can criticise any financial institution for prioritising lending to responsible borrowers.
“The Government and the regulators are encouraging the industry to go back to prudent lending. You cannot then say that because some people cannot get mortgages that it has gone too far the other way.”
The Council of Mortgage Lenders says lenders are restricted by regulation and a lack of funding and calls on the Government to tackle the restrictions.
A spokeswoman says: “It is all to do with the FSA, the mortgage market review and the restraints put on lenders. Obviously, there is a lack of funding and capital requirements are a huge thing at the moment.
“Unfortunately, while the politicians are saying lenders need to do more lending, they need to start talking to the FSA to find ways in which that can be achieved.”