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‘FTBs won’t be hit by MMR’

FSA chairman Adair Turner says the mortgage market review will affect first-time buyers the least.

In its final MMR consultation paper, published in December, the FSA said the final proposals would affect 2.5 per cent of borrowers in subdued times and 11.3 per cent of borrowers in boom times.

Giving evidence to MPs at the Treasury select committee evidence session, Turner said FTBs would not be affected by the proposals as much as other groups.

He said: “The figures actually suggest the impact is least, certainly in subdued times, on first-time buyers. That, when you think about it, is not surprising. First-time buyers, because they are constrained by their inability to get a deposit, tend sometimes to have lower loan-to-income ratios than some of the home movers, because these people have got the equity to deal with the deposit. So that is why we end up with a smaller effect on first-time buyers. Also, interest-only proposals have a very small effect on first-time buyers because few first-time buyers are given interest-only mortgages.”

Coreco director Andrew Montlake says: “The MMR will affect everyone, I do not think you can draw massive distinctions between different types of borrowers.”

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