Mortgage Market Needs Restructuring, reports one of Londons leading Mortgage Brokers, London Mortgag Wednesday, 30th June 2010

The UK mortgage market needs to be restructured so says The Financial Services Authority (FSA).

"We need to rebuild our mortgage market so that we end up with one that's more sustainable for everyone and works better for consumers". Lesley Titcomb, director of small firms and contact centre for the FSA, said when addressing the Council of Mortgage Lenders prior to the publication of the regulator’s latest paper on mortgage reform.

The FSA promised to ensure better conduct of business rules, intervene in interest-only mortgages where it feels the affordability should be assessed on a capital repayment basis, and ensure that lending is responsible.

However, the mortgage industry has called for greater clarity on how the regulator proposes to do this. Bob Pannell and Paul Samter, authors of the latest CML lending figures survey, called for clarity over how the mortgage market will be regulated.

"While we now know that the FSA will be disbanded, there is still little hard information over how the financial system will be regulated.

"The Chancellor has announced that he will hand regulatory responsibility to the Bank of England. This includes monitoring the health of individual firms [although how firms deal with customers will fall under the Consumer Protection and Markets Authority's remit] and the strength of the system as a whole.

"There has been speculation that this "macro-prudential" role may include limiting at what loan-to-value ratio some firms can lend.

"But, beyond the governor hinting at varying core capital requirements over the economic cycle, there has been no detail yet on what tools the Bank will be given to achieve industry-wide financial stability." Their report said.
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"There is still some concern around clarity, such as income verification and affordability that needs to be given, but we welcome the announcement that everyone dealing with mortgages will need approved person status." Robert Sinclair, director for the Association of Mortgage Intermediaries, said.

And he continued,

"While BoE will be the ultimate regulator, but as yet we do not even know who will be leading the CPMA, and we would not even want to speculate on who that person might be."