It's too little and it's late, but at least it's here

Published:

24/02/2009

Topic:

Press Release,Mortgages

Commenting on Northern Rock being told to start lending again, Louise Cuming, head of mortgages at price comparison site moneysupermarket.com, said: "This isn't just a u-turn for Northern Rock, it's a great big capital U-turn.

• U-turn on Northern Rock mortgages is welcome

"A nationalised Northern Rock was told by the Government to stop lending and get rid of as many mortgage customers as possible - now the Government is asking it to rescue the housing market by lending again. You couldn't get two more different policy positions.

"This should have been the Government's policy for Northern Rock from the outset so - while it is a case of better late than never - it is very late indeed.

"We have been saying for a long time that if the Government wants to stimulate home lending, it needs to lead by example.

"The Government though is behind the times with its call for a return to prudent lending. None of the major lenders - and only two minor ones - offer 100 per cent mortgages, so it is a joke for the Government to call for them to banned when, to all intents and purposes, lenders have banned them anyway.

"Today's problem is that prudence has gone too far.

"The level of lending the Government wants Northern Rock to reach is little more than a drop in the ocean. Mortgage lending is falling all the time and Northern Rock's re-entry at this type of level won't be enough to stop the rot.

"The Government's attack on 100 per cent mortgages is a case of political hyperbole and rhetoric, rather than focusing on the realities of situation. Placing the spotlight on an equity issue that no longer exists ignores the fact that credit history and mortgage affordability should play a major role in deciding what loan is suitable.

"It was the all too frequent dismissal of these three criteria together that brought the industry to its knees."

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