The time is right to get funding flowing
Posted on June 1st 2010
Last week saw two new entrants into the mortgage market, Precise Mortgages and Aldermore. Both have a large degree of commitment to the intermediary sector and hopefully you will view the moves as very positive.
New entrants to the market probably have very good reasons as to why they are making their move now. I can only speak for Precise Mortgages but we have a strong view that the worst is behind us. Of course we have one eye on the eurozone debt crisis and the tensions in North and South Korea which could turn into something of a financial nightmare but we still believe the risks whilst significant are manageable.
As lenders we look at the relative stability of the housing market, a volatile market is not good for us as it makes it very difficult to predict credit risk. Even if the market is not great, as long as it is stable and sustainable good lending decisions can be made. Right now the mortgage market is under supplied by lenders and liquidity is still a major problem that is acting as a brake on volumes which ultimately means borrower demand cannot be met.
We are bringing a small but significant level of new money into the market which we hope will be well received. Although we know we cannot fix the liquidity problem by ourselves we are doing our bit and hope that other lenders follow suit and help plug the liquidity gap that is causing so much damage to the economy.
