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Mortgage product regulation would hurt consumers

AMI also argues that mortgage intermediaries play a vital role in helping consumers decide what they can afford, which mortgage is appropriate, and in this they should be supported by the industry and the regulator.

The comments are made in "Better Regulation For The Mortgage Market", the second paper to be released by AMI in the run up to the publication of FSA’s Mortgage Market Review, expected in mid October.

AMI Director Robert Sinclair said: "The regulatory structure needs to balance the need to protect consumers from unaffordable debt with their desire to buy a home of their own.

"Product regulation risks strangling innovation and competition. Prescriptive Loan-to-Value controls will prevent vulnerable consumers from moving to more affordable mortgage deals when they seek to remortgage. And Loan-to-Income restrictions will penalise the careful consumer not the frivolous borrower. There are sufficient existing regulatory tools in place to deal with such market issues. And niche products such as self-certification, remain appropriate for some borrowers and should not be completely driven out of the market.

"We are concerned that the high-profile failures in other countries, sectors, and of some business models, will force FSA to act. It is essential that regulatory interventions are both well timed and reflect a full understanding of their long-term impact on the market. Few things undermine market confidence faster than regulatory change driven by the winds of political expediency. We recommend that regulatory policy maintains its previous course and direction."

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  1. Major Landlord says:

    My second rant of the morning, and once again against brokers!

    Let me remind you that it was greedy lenders whose antics upset the entire global financial markets with their too-clever deals and elaborate debt transfer schemes. And in housing, the problem was exacerbated by lenders turning a blind eye to the frauds committed by borrowers who lied about their ability to service loans, aided and abetted by unscrupulous, commission-driven brokers and intermediaries. Together, they created an over-supply of money in housing that was the single biggest factor in creating a bubble, which the lenders then burst by panicking over their own over-stretched positions.

    If this or our next government DOES NOT reign in lending by controlling borrowers, lenders and intermediaries, it will all happen again. Affordability underpins the housing market, and the housing market underpins our confidence and our economy. There can be no such thing as over-control.