Lenders could tighten their criteria even further if the regulator does not provide further clarity on the mortgage market review’s new rules.
In a mortgage panel debate at the Sesame Symposium in London last week, Nationwide group distribution director Matthew Wyles said lenders will restrict criteria for fear of falling foul of the new rules if they are not clear.
He said: “The great fear is of a principle-led scenario. We all know what principle-led regulation is – it is the ability to rewrite the rules retrospectively and tell us we were not consistent with the principles we thought we understood.
“Let’s get some rules we all understand because there is a danger that we lenders will end up building a firewall between the absolute limit about where that regulation may technically permit us and where we are willing to go. That is always a consequence of a lack of clarity.”
Barclays intermediary channel director David Finlay urged the FSA to keep up a constant dialogue with the European Commission to ensure the MMR will not have to be changed once the EC implements its mortgage credit directive. He said: “We want absolute clarity, no retrospective regulation and please talk to the European regulators as well, so we do not have to go through this again.”