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CML proclaims death of home ownership

The combined effect of restricted mortgage lending and a misguided financial regulator has resulted in the death of the golden age of home ownership, according to Michael Coogan, director general of the Council of Mortgage Lenders.

Speaking at the Council of Mortgage Lenders’ Future Housing conference today [September 22], he said: “Mortgage rationing has limited activity and left pent up borrower demand unfulfilled since 2007.  But, looking ahead, the barrier to a reversal of that trend will not be lenders’ future risk appetite or consumers’ aspiration, but rather an interventionist regulator managing conduct risk…”

Within the Financial Services Authority’s Mortgage Market Review, which is currently out for consultation, is a proposal that lenders could hold even greater levels of capital against high-risk loans, which Coogan (pictured) fears could further limit funding availability and consequently sales transactions.

He says: “The FSA accepts that the mortgage market has served many borrowers well in the past. It does not need to risk undermining that success for existing borrowers and potential future ones alike in addressing the problems that have arisen in the market.

“If it wants to shrink the market it should be clear that this is the consequence it wants.”

Coogan goes onto claim that the FSA's modelling approach underpinning the MMR is based on the expectation that house prices will fall. 

"I do not think it is the FSA’s job to undermine lenders’ security systemically in this way by precipitating house price falls, but if you reduce the number of transactions, create borrowers who have limited or no options to move their existing loan – so-called “mortgage prisoners”, and also increase negative equity in the market, is this delivering “flexibility” or “sustainability” for all market participants?"

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