There have already been government initiatives to help ease the situation and in some way restart the housing market.
But there is a more significant factor and one, which I feel, does not get the attention it deserves. I think this is partly to do with political correctness and also because it makes uncomfortable reading.
So what is this elephant in the room? To give you some clues, research by Precise Mortgages estimated there were around 1600 CCJs issued every day in 2011.
In all around 2 million people have had a CCJ issued against them in the last three years. In 2010, an estimated 4 million people missed a credit card payment and to cap it all a million people have missed at least one mortgage payment over the last 3 years.
Given the still highly restricted nature of most lenders’ criteria and the understandable desire to build mortgage books with as little delinquency as possible, what happens to the roughly a million customers out there, who are either wishing to move house or raise capital but cannot, because they do not fit current criteria? It is therefore, hardly surprising that such a wide cross-section of mortgage borrowers and house owners are stuck in limbo.
I think the time has come for a proper, grown up debate about how people with less than impressive credit histories can be rehabilitated into the wider lending family.
These clients are not ‘sub’ anything, they are just clients who have had a financial blip through an unprecedented double dip recession. Call them clients and stop patronising these hard working people.
To put this in context, I am not advocating a return to the bad old days of ‘anything goes’ lending. What I do believe is that we can only go so far to attract new business by lowering rates and tinkering with LTVs.
Of course, affordability and suitability must be the watchwords, but in denying credit impaired clients the opportunity to prove that they can borrow responsibly, a large number of the population will remain disenfranchised.
Ian Balfour is CEO at Solent Mortgage Services
