Caroline Havers,

Salans

If you read the Council of Mortgage Lenders’ (CML) report in full you do not come away with the sensationalist ‘blunt warning about the growing dangers of a housing crash’ as published recently by the Sunday Telegraph.

It is necessary for a trade body that represents such a large community of members to produce data, analysis and commentary that encourages serious thought about the market’s direction and impact on consumers. I would also argue that such thought provoking analysis should not be censured, but it is for those who wish to use the analysis and commentary to do so accurately – not the case in this instance. Will those words have any repercussions? I do not think so – consumers appear to have a continuing appetite for secured lending, and the Monetary Policy Committee’s (MPC) policy would have to see a seismic shift to adopt the strategy that Coogan was alleged to be advocating.

Graeme Hartop,

Scottish Widows Bank

The old adage is there is no such thing as bad publicity. One thing is for certain though and that is that the recent comments by the CML have heightened the awareness among borrowers that interest rates will continue to increase over the short to medium term.

My view is that while rates will rise over the next 12-18 months, this will lead to a gradual slowdown in the market and confidence in long-term stability has not been affected. The great debate remains as to what level of interest rate rise will affect confidence among house buyers. Although the CML’s comments were perhaps taken out of context, a cautionary note every now and again about the dangers of interest rate rises does help to focus the minds of lenders and borrowers on the need to ensure affordability is a key factor in decision-making when taking out a mortgage.

Mark Sismey-Durrant,

Heritable Bank

Given current interest in the housing market and, in particular, whether we are heading for continuing boom or a large crash, there is bound to be interest in what a leading authority on the market thinks may happen. The misunderstanding between the CML and the Sunday Telegraph could have had implications for market confidence had it been left uncorrected.

However, I believe that the CML moved promptly and decisively to clarify its position and as a result the suggestion that interest rates may need to double should have no particular effect. It does however emphasise to borrowers that the cost of mortgages is likely to rise in the near future and that they should consider this before committing to new borrowing. I am sure that future interviews with, and press releases from, the CML will become more guarded.

John Webster,

Preferred Mortgages

Michael Coogan, director general of the CML, now accepts its forecast said interest rates would need to double if the MPC wanted to bring house price inflation down to single digits immediately. Apparently this was only designed as a hypothetical observation. Unfortunately, the media – particularly the tabloids – seem to want to predict financial Armageddon at every opportunity. And if potential bad news is represented by just one line in an otherwise well-balanced report, it is not unreasonable to assume that it is the issue that will attract most press attention. There may be some positive repercussions – for example, if more homebuyers are persuaded that it is time to fix their mortgage rate to guard against rate rises. But so much of our economy’s performance seems to be based on confidence that I believe we undermine it at our peril. Rash statements, albeit hypothetical, need to be avoided.

Peter Lane,

Tenet Group

The papers were hoping the story of a dire warning of interest rates being doubled to bring down house price inflation would catch the nation’s attention.

But the public did not bite because very few people outside of the home loans sector know or care what the CML is. And, in any case, the truth of the matter is that the CML’s briefing article was well written, and its comments about the potential for large interest rate rises were carefully worded.

The story did not really matter. Homebuyers listen most to their friends and colleagues about house prices, with the rest just being background noise. And call me a cynic, but my experience of retail lending is that the consumer keeps spending until someone else turns off the tap, regardless of almost all warnings, so the CML story will have done almost nothing to market confidence at all.

Gerry Bell,

First National

The report from the CML was a revision of its market briefing. In this version various possible scenarios were evaluated. One particular paragraph of the report looked at what the Government could do if it wanted to reduce house price inflation to single figures immediately – this was a hypothetical situation. Taking the report as a whole and in context, this is clear.

However, the CML is aware of the intense media speculation around consumer borrowing levels and interest rates. I think it has tried to make every effort to provide people with a balanced view of the housing market and what might happen in certain circumstances.

Tom Bland,

Savills Private Finance

I do think that the CML should have been more careful, however I would like to clarify that this agreement with the statement is only relevant to a small section of its report rather than a generalisation of the entire article.

Clarity is what the industry is all about now – clarity, transparency and honesty. One of the directives set out in the MCOB is to give information in plain language. So, when Michael Coogan stated that this was only ever designed as a hypothetical observation, he may as well admit that plain language was at times missing from the report.

Indeed, the point, as also raised by Coogan, that real people make real financial decisions based on what they read and hear in the media, has perhaps a hint of naivety. Surely anyone in the CML’s position would ensure that it is not misunderstood when writing about something as prominent in people’s minds as interest rates. As for repercussions, aren’t there always?