Speaking at the Council of Mortgage Lenders’ annual conference in London, Mike O’Connor, chief executive of StepChange, said that while it was ‘a little too soon to tell’ whether the new sub-prime entrants were a cause for concern the charity was remaining vigilant.
“We need to keep our eyes peeled and our elbows sharp,” he said.
O’Connor said that mortgage lending to certain people should be restricted in favour of other forms of financial help. Stepchange wants to see more support for institutions such as credit unions which he said were under resourced and should be given more support.
Stepchange was particularly concerned about borrowers reliant upon tax credits.
O’Connor pointed the finger at past government schemes which encouraged people into home ownership.
“In the not so distant past a heady mix of risk appetite and public policy produced cases of sub-prime Right to Buy mortgages being sold to social tenants that could never keep up with the loan. No sane society should allow that to happen.”
He added: “The lesson we learned from the crisis and all that followed was that we should not assume that things would sort themselves out or that policy makers will keep their eye on the ball.
“Lenders should not put people under financial stress and should not make financial situations worse. Lenders must anticipate problems consumers can face manage our out detriment and manage in support.”