I did an interview on Monday with BBC Radio Essex on the launch by the FSA of the ‘eagerly anticipated’ consultation paper on reform of the mortgage market.
I thought it worth summarising my thoughts;
Whilst a 600 page document will take some digestion I do think headline grabbing criticism is wide of the mark. The FSA has listened to feedback from lenders such as Saffron, the Council of Mortgage Lenders and the Building Societies Association. This means the proposals are much more measured and reflect a substantive approach to avoid lax lending and promote sensible consumer protection. The affordability of mortgages under a range of interest rate scenarios and having a plausible repayment approach are basic tenants I would have thought any reasonable person would support.
A risk based assessment of particular lending markets such as self employed borrowers and bridging has been performed without disproportionate steps to close these markets.
The need for a close working relationship between lenders and intermediaries is sensible which should promote good intermediaries not threaten them and the use of transitional arrangements for some borrowers is very helpful.
In summary the principles are consistent with how Saffron approaches its mortgage borrowers; there will be considerable digestion and extension to policies but not a radical overhaul for Saffron.
Its also important for me that we are able to look into 2012 and be able to support real people with their mortgage needs through specialist and individual assessment, be competitive and innovate. These proposals are supportive of these objectives.
By the way my quote from the above on BBC Radio Essex was; “I think this represents a balanced position at first look. Clearly some borrowers that would have got mortgages before the credit crunch would have found themselves without those offers under today’s proposals. But I don’t necessarily see that as being a particularly bad thing in the current climate.”
Jon
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