Seven of the biggest UK mortgage distributors have joined forces to call on mortgage brokers to understand and make allowances for the huge strain the credit crunch is placing on lenders.
The unprecedented move sees the heads of six rival companies, representing over 30,000 brokers, join together to back an open letter to mortgage intermediaries written by Premier Mortgage Service managing director John Malone.
The group comprises PMS, Sesame, Openwork, Pink Home Loans, Personal Touch Financial Services, Legal & General Mortgage Club and Home of Choice.
The letter says intermediaries are wrong to accuse lenders of acting irresponsibly and breaking the requirements of the FSA’s treating customers fairly regime by withdrawing products at short notice.
It says: “This action by the lenders in our opinion does not constitute part of treating customers regime but more a commercial decision to protect their own liquidity position in keeping with running their business in a commercially sound way.”
The group of firms say that they understand that due to the current economic climate, some lenders are promoting their products more cheaply through branches to help control lending.
The letter calls on brokers to encourage clients to save more regularly with lenders to alleviate some of the liquidity problems.
The group suggests the situation will not improve until at least halfway through 2009 unless the Bank of England and the Government intervene to restore confidence in the wholesale markets.
Malone says: “This is serious, it is about the well-being of the country. We have got to bring our resources together as we have a real issue here.”
Malone says he believes that gross mortgage lending could be as low as £250bn this year, a fall of nearly a third from £360bn last year.
He says: “This letter is the first one for us to get together. We need to move the message forward to the Government and the Treasury. I think that distributors getting together to send a collective message will have a big impact.”
Letter, p8; Comment, p47