Speaking at a CML event in London today, Steven Cranshaw, chairman of the CML, explained that potential borrowing still significantly exceeds the industry’s ability to supply funds. “It is therefore a real possibility, looking forward from today, that net lending in 2008 could reach only half last year’s level unless additional funds become available. But it doesn’t have to be that way.”

While Cranshaw acknowledged the hazards of allowing the mortgage industry to be bailed out or subsidised by the Bank of England at an individual firm level, he highlighted the risks for the economy from substantially lower business levels, which could particularly affect housing transactions and first-time buyers.

Accusing the Bank of being “cautious and slow” compared to the Federal Reserve in the US, Cranshaw said it should work to attract stable domestic investors, such as pension funds, to fund the market.

Addressing the governor of the Bank of England, Mervyn King, he said: “We urge you, governor, to show leadership in the proactive coordination of central bank responses globally to the current systemic risks. And in the UK, deliver on your recent hints to the Treasury Select Committee that you would be prepared to be more flexible.”

Cranshaw emphasised that the industry wanted to help borrowers get on the ladder. He concluded: “We still have much more choice than we ever had before deregulation and the entry of specialist lenders into the market. We still have many consumers wanting to become home owners, given the opportunity. So let us continue to demonstrate to those who would criticise us that we are working for our customers, our industry, and the economy more generally through thick and thin, in good times and bad.”

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