It added that these lenders could also be unable to continue lending in the short-term if they are not given alternative funding sources.
The non-bank specialist lending sector has been severely hit since the coronavirus outbreak started with several lenders forced to stop taking applications and processing those in its pipeline.
Earlier this week it was revealed that lender trade bodies, including IMLA, have been in discussions with government and the Bank of England (BoE) to find solutions for this situation, with three potential schemes proposed.
Yesterday Belmont Green, parent company of Vida Homeloans, said it believes proposals to offer alternative funding to non-bank lenders could see specialist mortgage lenders return to the market.
Level playing field
IMLA executive director Kate Davies told Mortgage Solutions that the sector needed the support that other financial services industries had.
“IMLA, along with other trade bodies, is asking for the Bank of England and HM Treasury to provide a level playing field for lenders by allowing non-bank specialist lenders access to the same funding measures that banks can use,” she said.
“It is asking for a term-funding scheme to be made available to non-bank specialist lenders and, additionally, a Forbearance Liquidity Funding Scheme which would enable non-bank specialist lenders to fund loans on which forbearance has been provided, in line with the government’s announcement to borrowers.”
‘Difficult to offer forbearance’
And she warned there were significant risks for lenders and borrowers if that support could not be found somewhere.
“While it is too early to say exactly what the implications could be if these lenders are not given access to measures such as these, unless they are able to access funds, they may find it very difficult to continue to lend in the short-term,” she said.
“That could leave thousands of borrowers, specifically the self-employed and those with complex circumstances, much poorer in terms of the choice of mortgages available to them.
“In some instances, it might also mean lenders find it more difficult to offer forbearance to existing customers who need help,” she added.