Mortgage lenders cautious of increasing lending

The Council of Mortgage Lenders (CML) is asking for clarification from the Treasury regarding its suggestion that High Street banks benefiting from injections of capital from the Government will have to increase mortgage lending.

The Treasury has made it clear that it will be asking for various commitments from bank rescue beneficiaries, RBS, HBOS and Lloyds TSB.

The partly nationalised banks will be expected to restore mortgage lending to its 2007 level, over the next three years, and to develop competitively-priced products for homeowners.

In addition, Ministers want to see new schemes to help people struggling with mortgage payments to stay in their homes.

However, the CML is expressing doubts as to whether it would be either prudent or desirable for mortgage lending to return to 2007 levels, given the current market conditions.

The Council says it would prefer to focus on creating a mortgage market with a good spread of products that can provide loans for all credit-worthy borrowers.

According to CML director general, Michael Coogan, lenders have always been working hard to deliver competitive mortgages into the market.

They have also taken pains to ensure that as many people as possible are able to keep their homes if they suffer temporary financial difficulties.

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