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‘Sub-prime rates were cut too far’

Non-conforming lenders have overstepped the mark for sub-prime clients by reducing rates too much over the last year, according to Em Financial managing director Roger Morris.

Morris told the Money Marketing sub-prime round table discussion that the low rates supplied by non-conforming lenders has sent a strong signal to consumers that it is OK not to pay debts.

He said: “We feel, ethically, a consumer who has walked away from legal contracts and does not care, should be penalised with higher rates for a period of time until they deserve the high-street rates.”

John Charcol senior technical manager Ray Boulger said that a couple of months ago it had light adverse rates from lenders such as First National on its mainstream best buy rates.

Robert Sterling managing director Kevin Duffy said: “The grouping that has had the best run of it over the last two years is the consumer. When you assess what the intermediary does today in terms of cost of compliance and the risk that goes with it, lenders are obviously depressed about margin pressure but it has been the consumers that have had the best run of it.”

“Maybe now is the time when the UK mortgage market can address that and say to the consumer, sorry but this is a fair price you are getting.”

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