James Moore: Government should home in on right lending

Mortgage lending is off the floor, at least according to the British Bankers Association, but let’s not kid ourselves.

Activity in the housing market remains subdued by historic standards, and the chances are it is going to stay that way for some time. Is that necessarily a bad thing?

While it’s difficult for those wanting to move, for example, homes in Britain, and particularly in the economic engine of London and the South-east, remain expensive commodities.

Some would argue that house prices haven’t fallen enough, as regards affordability.

But the Government is planning more intervention in the market to help those beyond first-time buyers.

There are reasons for questioning that strategy. There is still a large number of people in this country who would find themselves in serious trouble if interest rates started to rise even slightly. Providing the facilities to tempt more people into moving up the ladder, to levels they might not be able to afford, is a dangerous business to be in.

While Mark Carney has made it about as clear as he can that the Bank of England is a long way from pushing the button, how long can this last? Nobody has really come up with a decent answer. Given that, reducing mortgage debt – and consumer debt generally – might not be such a bad thing, particularly if it leaves their finances in a more stable state when the economic cycle takes its next turn.

The Government seems committed to its policy of doing more to encourage lending. But perhaps it should look before it leaps and focus its attention on the small business market, where credit is genuinely needed and where banks can justifiably be criticised for not doing more to get it through.