Cost could be £170m a year

The total one-off cost of implementing the MMR will be between £40 and £65m.

The FSA said the industry will then face ongoing compliance costs of between £47m and £170m a year.

Broken down on a cost per proposal basis, the afford-ability requirements are expected to cost the industry between £3m and £15m to implement while the FSA’s interest-only rules will cost £14.7m to implement.

The ongoing costs for the affordability proposals are £7.1m-£10.3m, which equates to £17 for each mortgage sold, and £4.8m-£14.3m to pay for the ongoing costs of the interest-only proposals. Its distribution and disclosure requirements will cost between £22m and £33m to implement, with ongoing costs of £2m a year.

The regulator estimates mortgage lending will be reduced by 2 per cent in subdued market conditions and 10 per cent in boom conditions as a result of its responsible lending rules.

It has also estimated the rules would have an impact on 2.5 per cent of borrowers in the current market and 11.3 per cent in boom times and says house prices will grow by 23 per cent by 2022 with MMR in place, as opposed to 34 per cent without the MMR.