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Fsa - Strict Mortgage Limits Not Desirable

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http://www.ft.com/cms/s/0/a9338384-6b02-11...144feabdc0.html

Jon Pain, managing director of retail markets for the FSA said the level of a household’s disposal income, after mortgage payments, was a more appropriate figure than loan-to-value or loan-to-income ratios.

“There are lots of mortgage players out there at the moment who have very sophisticated tools to assess genuine affordability and even the ability to withstand interest rate changes,†he said.

“That’s what we need to get the whole mortgage market adopting – as opposed to necessarily a simple-income multiple. That’s not a true test of affordability.

Leslie Titcomb, sector leader for retail intermediaries and mortgages at the FSA, added that there were also concerns about the potential impact on first-time buyers.

“We are also concerned that having a fairly blunt tool like a cap on loan-to-values could have an effect of denying first-time buyers access to the market, which would be unfortunate,†she told the committee.

Bad news for those hoping for a return to 3.5 times salary. If the politicised FSA takes ultimate control (as Labour want) and the BOE is sidelined, how long until lending conditions are relaxed in an attempt to drive prices rapidly upwards?

Edited by Turnbull2000

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“There are lots of mortgage players out there at the moment who have very sophisticated tools to assess genuine affordability and even the ability to withstand interest rate changes,â€

:lol:

They have no intention of regulating this mess, never have, never will.

Total collapse will result and will be the only thing to perform the regulator tasks necessary.

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“There are lots of mortgage players out there at the moment who have very sophisticated tools to assess genuine affordability and even the ability to withstand interest rate changes,â€

:lol:

They have no intention of regulating this mess, never have, never will.

Total collapse will result and will be the only thing to perform the regulator tasks necessary.

yep can he point to any of these sophisticated mortgage players who are not presently bankrupt without state support of the banking criminal system

does he actually believe himself when he speaks

Edited by lowrentyieldmakessense(honest!)

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Makes no bones what the FSA or other regulators do at this stage the banks will not move of their comfort zone in any event.

All the time that continues then values are headed south even if the figures say otherwise at the moment.

Its only when prices re much lower and an affordability factor comes into play that there will be ques for mortgages. It is that point an eye will have to be kept on the banks.

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They have no intention of regulating this mess, never have, never will.
Fees levied by lenders in the mortgage market were a concern as there were some "extraordinary charges" Myners said, adding this should be a major focus for the Financial Services Authority (FSA), which plans to start a review in September.

They are busily trying to force banks into cheaper lending again.. heaven forbid they try to instil some discipline.

Linky

Edited by libspero

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September 2020 maybe?

They are all sooooo transparently committed to doing bug er all to change the status quo - and the media are so unquestioning - makes you think that they are all up to their necks in the same scam.

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Senior executives from the Financial Services Authority warned on Tuesday about the drawbacks of imposing strict limits on mortgage lending.

The comments appeared to pre-empt the regulator’s own a review of the issue in the autumn.

<H3 class=section>

Jon Pain, managing director of retail markets for the FSA, said imposing “caps or collars†on mortgage lending based on income or deposit ratios could be a crude tool for measuring affordability.</H3>Instead, lenders had more sophisticated ways to work out whether a household could repay a home loan, Mr Pain told the Commons’ Treasury select committee. Assessing a loan on the basis of income versus mortgage was a “superficial†ratio, he said.

There have been widespread concerns about the wisdom of banks being allowed to lend people five or six times their income to buy a house. Gordon Brown said in February that he would like to see a ban on 100 per cent mortgages which require no deposit.

Lord Myners, City minister, told the same committee that the prime minister wanted a “serious investigation†by the FSA into whether there should be an “ultimate cap†on loan-to-value ratios.

“I think we will see a progressive move towards an increase in the number of offerings of higher loan to value mortgages as confidence begins to return,†he warned.

In a submission to the committee, the FSA confirmed that it would address the question of introducing maximum loan-to-value or loan-to-income ratios on all mortgages in a discussion paper – “the Mortgage Market Review†- published in the autumn.

The paper will go even further by exploring whether the FSA should effectively ban self-certified mortgages – a substantial segment of the market – by requiring income verification of all home loans.

But Mr Pain spelled out the argument against such rigid rules on mortgage lending.

He said the level of a household’s disposal income, after mortgage payments, was a more appropriate figure than loan-to-value or loan-to-income ratios.

“There are lots of mortgage players out there at the moment who have very sophisticated tools to assess genuine affordability and even the ability to withstand interest rate changes,†he said.

“That’s what we need to get the whole mortgage market adopting – as opposed to necessarily a simple-income multiple. That’s not a true test of affordability.

Leslie Titcomb, sector leader for retail intermediaries and mortgages at the FSA, added that there were also concerns about the potential impact on first-time buyers.

“We are also concerned that having a fairly blunt tool like a cap on loan-to-values could have an effect of denying first-time buyers access to the market, which would be unfortunate,†she told the committee.

The comments illustrate the government’s predicament as it seeks to curb irresponsible lending while at the same time trying to compel banks to maintain the flow of loans to households and businesses.

Sally Keeble, a Labour member of the Treasury select committee, said the comments proved that there was a “clash†between the two arguments.

“I’m fairly certain there is a clash about what the government wants to do,†she told the Financial Times. “On the one hand, they want to see prudent lending, which argues for tight controls on loan-to-value ratios, on the other, they want people to be able to get loans.â€

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Personally, I think that's the attitude that'll keep securitisation from making any kind of meaningful comeback. Lack of transparency in the process by which a mortgage is deeded to "safe" is, I very strongly suspect, not going to play well with potential buyers of this stuff.

Anyway, I'd love to see a decent case made for anything more than 4x single or 4x largest + 1x smallest joint being "long term affordable". I'd also like to see cat inflate "Hubba-Bubba" with it's ****, but I doubt that'll happen either.

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Guest KingCharles1st

This is how it all started...

Liar Loans always help calculate disposable income

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Jon Pain, managing director of retail markets for the FSA said the level of a household’s disposal income, after mortgage payments, was a more appropriate figure than loan-to-value or loan-to-income ratios.

“There are lots of mortgage players out there at the moment who have very sophisticated tools to assess genuine affordability and even the ability to withstand interest rate changes,†he said.

Wasn't it the use of such "sophisticated tools" that got us in this mess?

If "mortgage players" using "sophisticated tools" concluded so many could afford 6x's loan to income how come ALL we hear this year is that "housing is more affordable than it has been for 6 years", yet apparently still FTB's can't afford to buy?

Worth a re-read of

Rationing is a vital fix for the broken mortgage sector

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Wasn't it the use of such "sophisticated tools" that got us in this mess?

If "mortgage players" using "sophisticated tools" concluded so many could afford 6x's loan to income how come ALL we hear this year is that "housing is more affordable than it has been for 6 years", yet apparently still FTB's can't afford to buy?

Worth a re-read of

Rationing is a vital fix for the broken mortgage sector

Exactly.

And how would these tools accommodate the current trend for wage reductions. LTV and multiples of income are part of the solution in that the have a 'through-life' perspective. I fear affordability metrics only concern themselves with the here and now.

OK so lets move to affordability, but lets not make it such that two incomes are required to buy the family home. This is not affordability this is control of the population.

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Why not do away with the moral hazard in the form of FSCS, CDSs and government financing of mortgages and see just how much money is REALLY available for mortgage funding.

Its socialism/Corporatism that got us into this mess, not capitalism.

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The FSA have learned absolutely nothing.

Why does the FSA still exist. The biggest waste of space in the country. These useless people are still vacuuming up pots of taxpayers money.

Looks like we will not move forward until the politicised FSA and the politicians responsible for the credit mess are gone.

Fortunately, the people are spooked and, though many will not like it it, are realising that the party is over.

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The FSA have learned absolutely nothing.

Why does the FSA still exist. The biggest waste of space in the country. These useless people are still vacuuming up pots of taxpayers money.

Looks like we will not move forward until the politicised FSA and the politicians responsible for the credit mess are gone.

Fortunately, the people are spooked and, though many will not like it it, are realising that the party is over.

I posted ages ago that the property market is like the ‘fire triangle’, which basically states that for fire to exist you need:

- Oxygen

- Fuel

- Heat

For the property market I equate this to:

- Oxygen:

The establishment that provides the environment in which excessive lending can occur.

- Fuel:

The provision of mortgage vehicles and equity schemes that enable the purchase of overpriced houses.

- Heat:

The sheeple that will buy at any cost.

Problem is the Oxygen is still present, the Heat is still present. However, we are currently experiencing a lack of Fuel. Once the Fuel is re-established we’re back to the inferno that is UK HPI.

Leadership is required, an understanding of the better good, someone with the authority to limit the supply of Oxygen. Yes, use affordability measures, but control them within LTV and multiples of income limits.

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Even if the FSA get their, just who the f*ck is going to lend the money??? This is what I don't get! Masses of investors who got their fingers burnt will not be returning to the market!

It's a non-story!

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In the past few years lenders have been using affordability calculations to determine loan sizes. Problem is that they never had any concrete income proof from which to work out the affordability from.

Income was declared income. Affordability calculated.

Now, hopefully we will have proven income as a starting point.

I have a funny feeling that this will make a difference. :lol:

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Even if the FSA get their, just who the f*ck is going to lend the money??? This is what I don't get! Masses of investors who got their fingers burnt will not be returning to the market!

It's a non-story!

Unless the government prints it.

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Fixed multiples, as were a generation ago or some income multiple, would be a nonsense. Firstly, any fixed formula will fall down when faced with anything like irregular income - even when that's very high and clearly ample. Secondly, it fails to distinguish between someone with a proven track record of saving and a shopaholic.

"Look, I can pay with a comfortable margin. Here's my proof of income, and here's my bank statements showing how much I'm saving after cost-of-living on that income, and at a pinch it'll cover payments on a 5xIncome mortgage at three times your current interest rate."

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“There are lots of mortgage players out there at the moment who have very sophisticated tools to assess genuine affordability and even the ability to withstand interest rate changes,†he said.

And for this very reason the securitisation market will stay firmly shut

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Fixed multiples, as were a generation ago or some income multiple, would be a nonsense. Firstly, any fixed formula will fall down when faced with anything like irregular income - even when that's very high and clearly ample. Secondly, it fails to distinguish between someone with a proven track record of saving and a shopaholic.

"Look, I can pay with a comfortable margin. Here's my proof of income, and here's my bank statements showing how much I'm saving after cost-of-living on that income, and at a pinch it'll cover payments on a 5xIncome mortgage at three times your current interest rate."

What are the sales-jockey sub-morons incapable of calculating say an average of the last 3/5 earnings, taking the minimum of the same (cautious-ish approach) or unable to check proven savings ability from accounts?

OR, is it really the point that the banks don;t want to check any of this stuff and are quite happy at passing off high risk and have no intention of carrying out such checks, that they may defraud first the investors and then the public so that they can keep on making their commissions and breaks on such deals?

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