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Massive blow for choice

The mortgage industry or, at least the distribution side of it, believes that Bradford & Bingley had to be nationalised.

But it is a massive blow for choice for intermediaries and for clients and customers. Regardless of the protestations of the banks which have made the grade and are gobbling the others up, borrowing will be more expensive.

The demise of the former building societies, all of which have now been taken over or nationalised, makes a strange tale.

Was it greed triumphing over all or simply outside circumstances defeating the sector? It was both although experts will disagree about where the different players sit on the roll of shame.

Some were greedy, some stupid, some made strategic mistakes. Some ran out of gas. All believed that the fundamentals of supply and demand were on their side in that not enough houses were being built while societal change, increased migration and rising prosperity fed demand.

Using affordability models from previous markets, the lending industry met demand in whizzy new ways, stressing that consumers were still not paying too much compared with previous eras. Home ownership increased, credit scores were repaired, buy to let created a healthy rental sector – all good things. But a property-obsessed public got more obsessed. Lenders had only been able to extend credit on the back of a global credit boom.

Funding lines were more vulnerable than anyone in the sector realised although as the mighty HBOS shed a little market share, others idiotically put their foot on the accelerator.

Northern Rock fell first. It had leant longest and borrowed shortest and good riddance. We have some sympathy for B&B but not much. They did not really understand what they were buying from GMAC and were too narrowly focused. HBOS were more unlucky.

The biggest question is what now? Do we want mortgage and property markets to have an even more painful readjustment and a return to building a big deposit over many years? A bit perhaps but surely not too much. Money Marketing hopes it is possible to preserve some innovation. But it may be up to mortgage intermediaries to make the case. No one else may be in the mood.

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