McDonnell: “Have bankers learnt nothing from the crash?”

John McDonnell has launched a scathing attack on bankers as new evidence shows lenders are lowering standards for mortgages to keep offering deals.

Responding to reports that banks willing to lend over 90% of the property value increased by a fifth in the last six months, the Shadow Chancellor said: “We have to ask the question of these bankers and mortgage lenders, have they learnt nothing from the financial crash?”

Almost 10 years after the global financial crisis, concerns have been raised that banks and lenders are encouraging growth by relaxing lending criteria for mortgages, as well as increasing maximum loan size and cutting arrangement fees.

The weakening housing market has seen competition amongst mortgage brokers grow while funding costs have risen – both squeezing the profit margins of banks.

McDonnell commented: “We are approaching the 10 year anniversary of the 2008 financial crash. A crash which was fuelled by the toxic culture of irresponsible lending.

“In a desperate attempt to win more business, bankers and lenders are all too ready to reduce lending criteria to maintain their growth, irresponsibly ignoring the obvious lessons of the past.”

The Shadow Chancellor’s intervention comes as it was revealed payday lender Wonga is close to collapse thanks to a rush of compensation claims in recent weeks. The claims were made after the Financial Conduct Authority (FCA) ruled on unfair debt collection practices and introduced a cap on the cost of credit in 2014.

Backbench Labour MP Stella Creasy, who has campaigned for tougher regulation of payday loan companies, tweeted that the “death of Wonga should be a wake up call to… every legal loan shark”.

Angela Rayner, Labour’s education spokesperson, joined the criticism, adding that she had “little sympathy” for Wonga as she pointed to a local case of debt-related teen suicide that continues to “haunt” her.