UK Housing Societies against FSA Move on Mortgage Regulations

The housing organizations and the law society in UK have warned the Financial Services Authority (FSA) against its proposed move to regulate the mortgage sector with its strict rules and regulations. The organizations include the National Housing Federation, House Builders Federation and the Law Society. The joint bodies of these organizations said that the proposals would be troublesome and oppressive to both homebuyers and the building industry in general.

According the organizations, the new rules if implemented would affect first time buyers and those with low income for acquiring a house. This would result in low house building levels which in turn might affect the building industry due to job cuts and unemployment.

Mr. Jonathan Fair, chief executive of Homes for Scotland, an organization in the joint body, said that the regulation could result in a market with fewer participants, less competition and less choice at a higher price for customers.

The regulation would make the lender responsible for ensuring that a borrower could afford a loan by imposing certain affordability tests to measure the capability of the applicant. The regulations also propose to eliminate conditions like lending high income multiples to individuals with poor credit rating.

The FSA however holds the view that it was necessary to regulate the mortgage market to protect 46% of the UK households that have no money left each month after paying their mortgages and bills.

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