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.