IMLA, the industry body for lenders who market their products primarily through intermediaries, holds the broad position that the proposals tabled represent an appropriate and measured response to the issues that the regulator has sought to address. The FSA has listened to the industry and has found a balance between the need for tighter regulatory controls and ensuring we can still have a vibrant, competitive and innovative mortgage market which meets consumer demands. However, the potential impact of the MMR relates to wider agendas.
Peter Williams, IMLA Executive Director, explains: “It is clear that the MMR has come a long way from when the first discussion paper was released in 2009 but there still remain some areas of contention, especially around interest-only routes and details of affordability. “IMLA’s assessment is that the direction of policy, which appears to prioritise consumer protection over consumer choice, along with more demanding prudential regulation for financial institutions, will limit mortgage supply and mortgages that are available will be more expensive.
“Combine this with the current state of the economy and we have a cocktail of ingredients that is acting as a cap on the ambitions of would-be homebuyers. Reflecting on the world we live in, there are already increasing numbers of non-standard borrowers and tighter restrictions are likely to fuel this even further. Buying a home at any point in their lives may not be a realistic option now for a higher proportion of “twenty-somethings”than has been the case since the Second World War.
“This is also the generation that has been let down by the destruction of the pension industry, carry the costs of higher education and have less opportunities in employment. Inevitably a much more constrained housing and mortgage market would become a source of considerable discontent and social inequality. At some point those affected are likely to bite back, potentially in the form of political action and there is a risk that the industry will be forced into new forms of lending.
“It is thus imperative at this stage that there is alignment between the FSA and the Government and a full recognition of the likely impacts and consequences. If these are deemed as acceptable then it would be helpful to see this clearly stated so that the industry are not caught between different positions.” IMLA have provided their comments on the MMR consultation, which closes on 30 March 2012, through the appropriate channels and will follow with interest the outcome.