Why UK mortgage lenders now have even more risk to manage

As house prices continue to rise, even mortgage lenders who hand money to those with poor credit history profit. But what will happen when the property market stops going up?

One of our most treasured documents is an article written by P. Henry Mueller when he was Chairman of the Credit Policy Committee at Citibank in 1978. His article which was based on a talk that he gave to the eighth Annual Meeting of the Financial Management Association in Minneapolis, was about the basic principles that should apply to bank lending, its title was "What Every Lending Officer Should Know About Economics".

The lack of applied knowledge about the lending/business cycle link can, he then said, be traced to both the manner in which current lending practice has evolved and to the widespread failure of borrowers and lenders to appreciate fully that business decisions, which they make or do not make, are in themselves economic forecasts.

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