“Signs that the risks are increasing would be property prices falling, larger than expected increases in interest rates, especially if over a short period, and/or sharp rises in unemployment.”
Mr Torpey suggests: “If there were ever signs to look for, it would be a relaxing in lending criteria, excessive growth, high LTV [loan to value] lending and increased arrears, and none of these are prevalent in the market today.
“Existing customers served by specialist lenders would not necessarily be impacted by a future crisis as they have a term commitment from their lender, but it is likely that the availability and cost of new products for new customers would be severely impacted.”
He predicts self-employed customers, who typically make up 30-50 per cent of specialist lenders’ loan books, are likely to be disproportionately impacted by any charges.
eleanor.duncan@ft.com
