CPA chair: We haven't got the balance yet with mortgages

There is a danger that mortgage lending has become too strict, the chair of the Construction Products Association is warning.

Speaking at the organisation's autumn lunch, Adrian Barden said: “Whilst we would not want to see a return of the irresponsible lending for house purchase that was happening in the middle of this decade, there is a danger that the pendulum will swing too far the other way. Recent announcements about more stringent criteria for mortgage lending do not fill me with confidence that we have yet got the balance right.

“If we don't get that balance right, there will be added constraints on the industry, not just in slowing the recovery for new housing, but also in holding back house moves within the existing housing, which is so often the trigger for home improvement.”

Barden continued to say that one of the reasons why the UK economy has been slow to come out of the recession is that the scale of the fiscal stimulus directed to construction has been smaller than in most other major western economies. He said: “There is little prospect of strong and sustained growth in the economy as a whole without a recovery in the fortunes of the construction industry because it makes up more almost 10% of the economy and delivers the things that are needed to sustain business success, such as energy supply and the transport infrastructure.”