No Hurry To Make Alterations To Homeowner Loan Regulation
Following the publication of his report recently, Lord Turner, chairman of the Financial Services Authority (FSA), made a speech at the FSA’s Mortgage conference yesterday (12th May) in which he highlighted the complex nature of the review of homeowner loan or mortgage regulation which is to be carried out later in the year.
The initial report suggested that major changes were necessary in how the homeowner loan market was regulated for both lenders, loan brokers and intermediaries as well as changes to loan products themselves, such as a restriction on maximum loan to value ratios and income multiples, along with a possible ban on certain types of secured loan, for example self certification loans.
In his speech, Lord Turner said that although new regulation for the industry was necessary, there was no particular rush to enforce new rules and it would be better to ensure that the right decisions were made. He also suggested that any changes were more likely to be aimed at banks, building societies and other loan companies, rather than dramatic changes in loan products.
He said “So should the FSA end up recommending limits on LTV or LTI, the headline issue on which the debate about the future of the mortgage market sometimes focuses? I do not know at present and make no apology for that lack of certainty. What I have tried to do today is indicate that the issue is a complex one, which requires careful consideration and further empirical analysis, running up to the FSA September discussion paper and indeed subsequently, in a wide ranging debate. We do not need to rush to a decision. We do not face today, nor are we likely to face anytime soon, the danger of irrationally exuberant behaviour by either borrowers or lenders. We have time to get it right.”
