Mortgages Uncovered

The deputy CEO at RBS said this week;

“Lending mortgages to homebuyers with no deposit is immoral and akin to giving them a “loaded gun.”

The comment has further increased pressure on the Financial Services Authority whilst there are calls for Gordon Brown to ban 100% mortgage lending.

The RBS deputy CEO, Gordon Pell said directly to MP’s last week that 100% mortgages were “bad banking.”

It was common knowledge that Mr Pell had just got back from Singapore where their banks were not allowed to lend over 80% of a property’s value.

“RBS would be able to operate in this type of environment, he said. “If you tell me these are the rules on the pitch, I will work to them … If you define the pitch for me, I will operate on it. There is a lot of sense in qualitative controls of this sort.”

The bank has been cautious in the market, lending very few customers 100% mortgages, which is a huge contrast to it’s’ rivals like Northern Rock. But Mr Pell’s out-spoken comments –

“it is immoral for us to put a loaded gun in the hands of someone who can’t afford to repay”

– are likely to reinforce calls for stricter mortgage regulation.