Mortgage lending in the UK has reached 'unmanageable' levels and must shrink as a proportion of national economic output if banks are to make home loans profitable again, a report says.
According to the annual world retail banking report from Cap Gemini, Unicredit and EFMA, mortgage lending has 'exceeded reasonable limits' with the volume of debt running at 86% of GDP – or about £1,200bn. The report recommended 60% as a sustainable upper level.
Andrew Sheehan, a management consultant at Cap Gemini who contributed to the report, said: 'The scale of mortgage lending in the UK is unmanageable. As GDP grows, mortgage lending should decrease to about 60%.'