Lenders attacked over sub-prime tactics

Mortgage lenders have been accused of 'irresponsibility' and 'aggression' when it comes to providing sub-prime loans to borrowers, though the industry has angrily denied such claims.

Citizens Advice (CA) has said that there must be a more sustainable route to home ownership that does not allow lenders to promote deals that borrowers cannot actually afford.

But both the Intermediary Mortgage Lenders Association (IMLA) and the Council of Mortgage Lenders (CML) have said that while the report contains valuable suggestions, it is overly simplistic and does not highlight the valuable role that sub-prime mortgages can play in the market.

"We believe some of CA's proposals are worthy of further consideration, but we would stress that sub-prime represents less than ten per cent of the market, and the incidence of difficulties in this market has been small," said IMLA executive director Peter Williams.

"Many sub-prime lenders are flouting the rules on responsible lending by granting loans when it's clear the borrower will not be able to afford to repay it from the very outset, then getting tough immediately things go wrong," said David Harker, CA chief executive.

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