John Charcol senior technical manager Ray Boulger says the FSA is the biggest threat to the mortgage market.
Boulger’s claim follows the release of Council of Mortgage Lenders research which shows 3.8m mortgages – or 51 per cent of loan applications – would not have been granted if the regulator’s Mortgage Market Review had been in place between the second quarter of 2005 and the first quarter of 2009.
Boulger says: “I actually think the biggest threat to the mortgage market over the next year is not the lack of mortgage lending – it is not even the lack of consumer confidence – it is the FSA.”
Boulger has also called for the Government to step in. He says: “I’m surprised the Government hasn’t taken more of a stand on this. If the FSA proposals go through, it will have a big impact on house prices. And if we had a substantial fall in house prices, you would then need, in all probability, a second bank bailout. And you could stop all of that by sensible regulation.”
Emba group sales and marketing director Mike Fitzgerald believes the measures will lead to a “lost generation” of mortgage clients.
He says: “The CML research just shows you that if the MMR comes in its current format, there is going to be a dead 10 years, we’ll have a lost generation of mortgage clients. I don’t think they have got any appreciation about the impact of their rules.”
“It is a social right to be able to own your own home – you are denying them that right with these proposals.”
The Association of Mortgage Intermediaries and the Building Societies Association have also expressed concern about the MMR.
AMI director Robert Sinclair says: “The regulators apparent aversion to a type of borrowing that has served many consumers very well appears predetermined rather than driven by rationale. When they are delivered on an advised basis and with a robust assessment of appropriateness for the customer, there is an appropriate place and use for interest only mortgages.”
BSA head of mortgage policy Paul Broadhead says: “There is a real danger that the FSA could introduce over-burdensome regulation that will stifle this market and affect many existing borrowers – including many for whom this is a suitable option.”