Cable comments on new FSA regulations
November 22, 2009
Following the announcement by the Financial Services Authority with regards to changes to mortgage lending regulations to prevent another financial meltdown a number of industry groups and officials have given their opinions on the measures.
One of the people that has commented on the new FSA regulations was Vince Cable, spokesperson for the Liberal Democrats.
Cable stated: “Some borrowers and lenders have already decided that the housing market has bottomed out and are now piling back in. With unemployment rising and massive uncertainty in the economy, this is a very dangerous game to play, which is why there needs to be clear guidance on the affordability of mortgages. It is not in the national interest to pump more credit into the mortgage market. However, a distinction has to be made between existing mortgage holders struggling to renew who clearly need help and those chasing new mortgages with very high loan-to-value ratios, who do not.”
“Better regulation of the mortgage market is welcome and it is right that self-certification should be restricted, though abuse of self-certification is fraud and should always have been treated as such. With such a complex mortgage market already in existence, highly prescriptive rules for mortgage affordability are not appropriate. It is critical that a simple and safe stakeholder-style mortgage, as the Liberal Democrats have proposed, is introduced.”
An official from the Building Societies Association said: “While much of the detail in the paper is sensible, we have significant reservations about the possible unintended consequences of some of the ideas expressed. We need a sensible balance between appropriate regulation and allowing people to buy their own home when they can afford to do so.”
He added: “We believe that home ownership is something that should be encouraged, and it is vital that lenders retain the flexibility to respond to the very individual financial circumstances of individual borrowers.”
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