Mortgage review threatens housing market
Housing bodies have written to the chancellor warning proposed changes to mortgage regulation will have ‘dire consequences’ for the market.
The signatories to the letter, which include the Chartered Institute of Housing and the National Housing Federation, are particularly concerned about the impact on shared owners and first-time buyers.
Under proposals put forward by the Financial Services Authority, mortgage lenders would have to take responsibility for a borrower’s ability to repay their loan, and conduct more stringent checks. A consultation on the plans closed yesterday.
Research carried out by Policis shows the FSA’s new rules would have reduced the amount available to 5.6 million of the current 11 million mortgage holders, with 2.2 million unable to access any funding.
It says the changes would stop 153,000 house purchases a year, with up to 57,000 first-time buyers being refused finance.
CIH chief executive Sarah Webb said: ‘There is a clear need for better mortgage lending. However, the proposals in this consultation will prevent households who could service a mortgage from realising their aspirations to become homeowners.
‘Furthermore, there is a real risk that these measures will undermine what is already a weak housing market – putting jobs and homes at risk. This isn’t just a case of closing the door once the horse has bolted, this will make matters worse.’
NHF chief executive David Orr said: ‘If the FSA does not alter its stance, it will strangle mortgage lending for first-time buyers and destroy the ability of lower income families and key workers, priced out of the open market, to part-buy shared ownership homes from housing associations.’