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TSC member “horrified” by the MMR

The mortgage market review will hit first-time buyers, the building trade and the mortgage industry, according to a senior Labour MP.

Speaking in this morning’s Treasury select committee evidence session with Nationwide, Labour MP George Mudie said the review would hit lenders as well as having a wider detrimental impact.

He said: “I am horrified by the MMR, the FSA have lost their balance. To guard against, “oh, you were weak and you are still weak”, they have swung the other way, and it seems to me they can damage the building industry, the mortgage industry and young kids trying to get a start with a new house.

“It seems almost personal and would rob building societies of discretion. It is one thing building up a mortgage book of questionable loans and another taking a chance on a young couple who are clearly in work but cannot get that deposit.”

Nationwide chief executive Graham Beale told the committee the FSA were taken by surprise by the amount of unintended consequences the review had when they first launched the idea in October 2009.

He said: “I do not think the FSA did a full economic assessment in terms of understanding the implications of the review on the the ability of borrowers to borrow from banks or building societies, and when they did they found there was an awful lot of unintended consequences.”

Those unintended consequences coming to light, are, he says, the reason for the review going back to consultation, however the FSA does not carry out cost benefit analyses until it releases detailed proposals and the initial paper for the MMR was a discussion paper aimed at soliciting opinion.

Beale said the FSA was right to make sure the mortgage market does not return to irresponsible lending.


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There are 16 comments at the moment, we would love to hear your opinion too.

  1. For once I agree with a labour member.

  2. At last someone who see’s the FSA for what they realy are !! a bungling load of baffons tinkering in something they no nothing about !AS USUAL.

  3. So, the lobbiests have been at the MPs again. You never heard a pip squeak when lending was totally out of control. So, the FSA are now trying to sort it our once and for all and the lenders and brokers and developers hate it. Quelle surprise. House prices (costs) are a joke. They need to come back to relaity.

  4. Housing will suddenly become affordable again if the MMR ever sees the light of day.

    Funny how the usual vested interests are throwing their toys out the pram.

    Pure greed.

  5. The mess that we are in is caused by unregulated loans with far too high income multiples. As a financial adviser told me: “In 2006, EVERYONE was earning 150k a year. Clearly this is wrong and unsustainable. When headlines state that 2% base rates would be unaffordable for many, there is an inherent sickness in the housing market.

    The average FTB age is now 37 (unassisted ) and we have scientists wanting to ‘teach’ us that the natural age to have children is between 20-35. Is there any correlation there? It’s not that people need teaching, more that they need a conducive environment to bring up children, chiefly affordable house prices.

  6. The building industry has been making a killing for the last ten years, as has the Mortgage industry.I think this move is to protect young kids from being suckered in to the ‘clip joint’ the housing market now is.

  7. Labour have already ruined the chances of a generation to get on the housing ladder with their incompetent management of the economy and failure to regulate the banks at all. The MMR is a lifeline to a generation of ‘kids’ who have been thoroughly shafted for a decade.

    Pure greed, no doubt worried about his buy to let portfolio.

  8. The MMR is a tough balance. On the one hand it is awful as I need these “kids” to get on the market so I can sell my buy-to-let for a hefty profit. On the other hand, if they are stopped from borrowing at 5+ income multiples then they can carry on paying my mortgage with their rent.

    Has anyone done the maths of the most profitable way for me to exploit these people?

  9. I am a first time buyer with a wife and child. I earn 28,000 pa. On saturday I was offered a 136,000 mortgage over 20 years with a well known high street bank. I have a large deposit. The bank does not care if I can’t pay and become homeless as long as they make a profit.
    More regulation is needed. Please bring us back to reality.

  10. I’m pretty horrified the Labour government engineered house prices to the astronomical levels that nobody can afford. Of course, it blends nicely with their communist mindset that only the government owns property. He should moan? Have a look at his expenses records. If we could get expenses like that. maybe we could afford a house. These MPs don’t live in the same world.
    I’m glad sensible lending will be introduced. It will reduce prices to something we can afford.

  11. BTW, a large proportion of mortgages taken out were based on false income information. In other words, prices were help skywards by FRAUD. When is all this fraud going to be investigated. It’s no way to run a so called civilised society.
    Does this MP still support a pricing structure that can only be supported by fraud?

  12. We need more lending at 10x average salary or the economy will tank as our main industry is houseprice speculation. The FSA’s intereference will result in a double-dip recession because if house prices do not increase month-on-month, then the public get scared as they are paying 50% salary into keeping a roof over their head. I propose we the FSA is dissolved and people, especially FTB’ers can claim to earn whatever they want, so all of us become millionaires. Oh wait, that’s what we tried in 10 years of Labour governing us…..oops.

  13. The main thing stopping people from buying houses – is high prices caused by lack of supply related to a rising population. Reckless lending will only ever be treating the sympton and never the underlying illness our great nation is suffering from. If we are to be a truly competitive nation we must provide cheap – and not so called ‘affordable’ housing through ‘innovative’ financial engineering which 1) Keeps people in debt for life and 2) decreases our competitiveness through higher wage demands to pay for high cost housing.

  14. Property parasites need not worry…the lobbyists have got their claws into the politicians.

    MMR will never see the light of day.

  15. This MP has been making money from property like most of them, having two houses. First time buyers are needed to keep the gravy train going fot them. He claimed £62,000 in expenses for his London flat in four years, while having a mortgage of just £26,000.

  16. As a Labour Party member I ‘m horrified by George Mudie’s cynical attitude to the MMR. Let’s face it nobody gave a stuff about first time buyers when prices were rocketing but now they’re falling we have all these crocodile tears for them.

    The reality is the MMR would bring in sensible lending regulation that the market is clearly lacking. Mayeb Mudie would rather go back to liar loans and 6x multiples and see first buyers take on unsustainable mortgages only to be repossessed when interest rates rise in the coming months.

    The truth of the matter is the MMR would benefit first time buyers in the medium term as it would lead to further falls in house prices. However falling house prices would hit the numerous VI’s who feed off the bubble and would of course hurt the numerous MPs off all postlitical shades with property portfolios. It’s time that either Mudie, Shapps et al either shut up or came clean on their true motivation for hijacking this sensible piece of regulation.

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