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More regulation means tighter credit in future

The growing regulatory burden on building societies is making it more difficult to return to higher levels of lending, according to the Building Societies Association.

Prime Minister David Cameron complained in January that while credit was previously too available, “the pendulum has now swung too far the other way” and it is now too difficult to obtain a mortgage.

Speaking at the BSA annual conference in Birmingham last week, outgoing BSA chairman David Webster said he agrees with Cameron’s sentiment but increasing regulation means further tightening of credit in future.

He said new rules allowing taxpayer-backed National Savings and Investments to take £2bn net from the savings market will mean there is less money available for lending and that the FSA’s new Building Societies Handbook limits the amount of high loan-to-value lending societies can do.

He added that having to generate additional capital to meet international capital reserve requirements adds further pressure on lenders.

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