Are lenders cherrypicking?

Banks deny that they are cherry-picking applications and brokers say otherwise. What I can say is that we are going through a credit adjustment where there just isn’t the appetite for lending that used to exist. This is natural, it happened (for instance) in Finland in the 90’s, it took a decade for lending to reach bubble levels again. As well as this, when you have a rapid build up of borrowing, it is like people were reaching further and further into the future for greater amounts in order to spend in the present, that is a basic premise of lending, you give up future income streams in order to spend today and that applies to credit cards, personal loans, and mortgages as well. Finally, during a recession in which unemployment is rising, asset prices are dropping and many have taken wage cuts, appetite for high level financial obligations will be naturally surpressed.

So it is no surprise that annual lending for 2009 was only €8.1bn, that is …

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