To put things in perspective, if we visualise a risk curve, the state of lending before the credit crunch would have been right at the top of the risk curve, where adverse credit self cert loans were being issued alongside high risk loans up to 95% LTV - it was complete madness.
In comparison we are now barely past the starting line. I believe we will move a little way further up that risk curve over the next year or two but this will be a long, drawn out and slow growth and I do not believe that we will again reach the lunacy of previous years.
In this respect the MMR has been a very good thing. Although the MMR has its critics and there are some areas that have made brokers lives more challenging, the positives are that it has engendered a growing culture of responsible lending and has curtailed the potential phoenix type rise of the adverse credit sector.
The easing of criteria in the way that it is being done is a good thing. The back lash from the credit crunch meant that criteria became far too tight leading to a lot of disenfranchised borrowers. Now these much maligned borrowers are being given a chance once again.
This is not irresponsible lending however. The new lenders coming to market spend months before launch honing their proposition to ensure that they can lend safely and responsibly.
Many of the new lenders are funded by third parties and want to minimise risk. They want to ensure beyond all doubt that the lender they are investing in will lend responsibly. There is still room for a further relaxing of criteria though and I think we will see this soften more this year, encouraged by the new entrants. The smaller lenders are able to do this because they lend much lower volumes so they are able to look at each case on an individual basis.
This has to be a good thing. There are a number of people who have an impaired credit history due to an unfortunate event in their lives but who are still more than capable of paying a mortgage. An increase in lenders that will cater for this market can only be a positive.
Now we just need to work on the perception of the market and ensure that it is understood more widely that this is not irresponsible lending to vulnerable or rogue borrowers, but responsible lending to people who can afford a mortgage who just happen to have had some misfortune in their lives. It can be nothing but a positive that these families are being provided with the opportunity to get on the housing ladder at last and have a home.
