Help first-time buyers, CML chief begs lenders

Lenders have been urged to come up with creative new products for first-time buyers, in order to “keep the wheels turning” in the housing market.

The call came from Matthew Wyles, chairman of the CML, speaking at its Mortgage Industry Conference

He said that falling house prices were not the solution to affordability because for every first-time buyer helped by lower prices, there were 14 home owners who would be adversely affected.

He went on: “The other problem is that when house prices fall, lenders have to find yet more capital to support the potential losses or impairments they may face as a result of previously secure lending becoming more risky.

“This reduces new lending and so creates a vicious circle that exacerbates the very phenomenon of falling prices that is causing lenders to pull back.

“This cannot be a desirable outcome.”

He said lenders needed to focus on product innovation that would be risk-appropriate for first-time buyers.

He also called for the industry itself to keep explaining to consumers the importance of protecting their credit scores.

He said: “This is a message that we need to make sure becomes really embedded in the consumer psyche, in a way that it doesn’t currently appear to be.

“The answer is to educate consumers, not to water down their responsibilities.”