16 Jun

CML: Mortgage cap shouldn't limit high-risk lending

CML: Mortgage cap shouldn't limit high-risk lending

The Council of Mortgage Lenders (CML) has suggested that the government's possible mortgage caps should not restrict high-risk lending.

Director general of the CML Michael Coogan spoke out about the possibility that the chancellor will allow the Bank of England to limit the type of mortgages borrowers can receive in the future.

He suggested that if banks avoid lending money to high-risk clients it could affect the entire property market, as it might "dampen risk appetite".

"We … need to remember that what is currently bothering most people about the mortgage market isn't high-risk lending, but the fact that lending is so constrained into low-risk borrowers," Mr Coogan said.

According to the CML, there are 2.5 million outstanding mortgages that are worth more than 75 per cent of the value of the property.

He added that risky lending was not the cause of the banks' problems but their inability to refinance their loans.

Earlier this week, the National Association of Estate Agents suggested that despite the political changes over the last few months, the property market has shown encouraging signs by remaining relatively stable.

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