Council of Mortgage Lenders director general Michael Coogan says the mortgage market review will “kill” the wrong part of the sector.
Speaking at a round table hosted by thinktank the Centre for the Study of Financial Innovation, Coogan said the regulator’s proposals would push more existing borrowers into difficulty and stop first-time buyers getting on the property ladder.
He said: “If the diagnosis is correct, its prescription will kill the market at the wrong end of the spectrum.
“There will be less lenders, less lending, more existing homeowners in difficulty and more first-time buyers struggling to enter the market.”
Coogan believes that the objective of a regulatory review should be decided before the FSA races ahead with a set of proposals for the mortgage market.
He said: “Whether protecting the minority from the wrong outcomes is a better objective than providing an opportunity to the majority to become homeowners is something you should ask your MP, the FSA and the CML. That should be determined before the FSA decides what the outcome should be.”