Council of Mortgage Lenders director general Michael Coogan admits that recent action by lenders in withdrawing so many products has damaged the market.
Coogan said at the debate that lenders were being forced into short-term decisions by the present market conditions.
He said: “If every lender acts in a way which protects their own interest, we will end up with the worst outcome for the market overall but they are all having to take short-term responses to an environment changing daily.”
Coogan said lenders are lik- ely to focus on loans which are lower risk and these loans would be remortgages rather than purchases. He said that new borrowers will not be getting mortgages which are linked to base rate but which are linked to market rates for fixed products.
Coogan said: “We have also seen there is a shortage of funding as a result of the capital markets’ closure. We estimated last year that there would be a gap of around £25bn-30bn between what we estimated consumer demand would be at £90bn this year and what funding might be. That is a rough and ready estimate but I think we are already seeing there is a real gap and that will affect pricing.”