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jaydee

Fsa 3x Earnings & 5% Deposit Regulation Quietly Dropped?

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The three times salary and 5% deposit mortgage borrowing regulation apparently to be introduced with some urgency by the FSA in the spring of this year (see the link below) seems to have been abandoned.

http://www.telegraph.co.uk/finance/persona...-borrowing.html

A recent request to my MP to enquire as to why the FSAs proposal for mortgage regulation appeared not to have been implemented, elicited this response from the Director of Retail Policy & Conduct Risk at the FSA:-

“The FSA has not proposed any such limits. Rather, we are currently reviewing our regulation of the mortgage market. As part of this review we are still considering whether we should implement loan-to-income thresholds or require minimum deposits. Later this year we will publish a Discussion Paper setting out our viewsâ€.

What a breathtaking contradiction. Or was it simply highly imaginative reporting by the Daily Telegraph?. Or was it because the FSA announced without approval from #10? … if so, so much for independence. Still considering! why?. Thresholds or deposits - why not both?. Discussion Paper - to be discussed (and decided) by whom?. I sense a determined playing for time by this government via a deliberately ham strung FSA.

I suspect the apparent U turn was insisted upon by our negligent government. There is clearly no intention thus far to apply any such controls. Controls that were routine in the decades before new labour came to power when a 10% deposit was mandatory.

In spite of the misery caused by excessive and liar loan lending, financial companies are still ready and seemingly eager to offer 100% + mortgages, their web sites bristle with the ‘benefits’ this will bring to first time buyers and re-mortgagees, one example of many is mortgage broker John Charcol www.charcol.co.uk ,another, clickngomortgages www.clickngomortgages.co.uk.

One would have thought, that such brazen touting for high risk business - by the sector that played such a large part in own collapse, would have been banned.

I urge all who have an interest in returning property prices to reasonable levels to take it up with their MPs and perhaps also to write to the media asking (no - perhaps demanding would be best) that the perfectly sensible and urgently needed FSA proposal - so enthusiastically reported earlier - be implemented without delay.

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I thought they were to be abolished anyway.

To add:

These are the morons that turned a blind eye to :ph34r: Liar loans, which were first exposed in 2003. They continually loosened regulations in order to allow banks to do the amazing things that they did (ie turn debt into unrealistic leverage and then start building card houses with the receipts). What do they do anyway, apart from get paid and laugh until they cry?

Edited by jammo

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Yes. I posted on this a while back

FSA - Strict mortgage limits no desirable

Particular emphasis was put on the plight of first-time buyers, who will apparently suffer if income multiples are limited. The fact prices would fall to match these multiples seems to have either passed them by or they're actually more concerned with maintaining high prices. My money is on it being the latter. The FSA is politically motivated after all.

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 unfortunateâ€
Edited by Turnbull2000

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The three times salary and 5% deposit mortgage borrowing regulation apparently to be introduced with some urgency by the FSA in the spring of this year (see the link below) seems to have been abandoned.

http://www.telegraph.co.uk/finance/persona...-borrowing.html

A recent request to my MP to enquire as to why the FSAs proposal for mortgage regulation appeared not to have been implemented, elicited this response from the Director of Retail Policy & Conduct Risk at the FSA:-

“The FSA has not proposed any such limits. Rather, we are currently reviewing our regulation of the mortgage market. As part of this review we are still considering whether we should implement loan-to-income thresholds or require minimum deposits. Later this year we will publish a Discussion Paper setting out our viewsâ€.

What a breathtaking contradiction. Or was it simply highly imaginative reporting by the Daily Telegraph?. Or was it because the FSA announced without approval from #10? … if so, so much for independence. Still considering! why?. Thresholds or deposits - why not both?. Discussion Paper - to be discussed (and decided) by whom?. I sense a determined playing for time by this government via a deliberately ham strung FSA.

I suspect the apparent U turn was insisted upon by our negligent government. There is clearly no intention thus far to apply any such controls. Controls that were routine in the decades before new labour came to power when a 10% deposit was mandatory.

In spite of the misery caused by excessive and liar loan lending, financial companies are still ready and seemingly eager to offer 100% + mortgages, their web sites bristle with the ‘benefits’ this will bring to first time buyers and re-mortgagees, one example of many is mortgage broker John Charcol www.charcol.co.uk ,another, clickngomortgages www.clickngomortgages.co.uk.

One would have thought, that such brazen touting for high risk business - by the sector that played such a large part in own collapse, would have been banned.

I urge all who have an interest in returning property prices to reasonable levels to take it up with their MPs and perhaps also to write to the media asking (no - perhaps demanding would be best) that the perfectly sensible and urgently needed FSA proposal - so enthusiastically reported earlier - be implemented without delay.

Good post, jaydee.

Just underlines the world of venality, lying and broken promises we live in. The authorities will say anything to win the moment, or get the headline, without any intention of ever fulfilling their promise. There isn't a single shred of decency or principle left.

The sooner these corrupt b@stards are out, the better.

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There is an argument* that limiting borrowing to buy a house gives an advantage to those already wealthy, as it prevents those who have nothing but their natural endowment (labour) to offer as wealth, bringing forward expenditure. Certainly, if we are entering a period of high inflation, those cash rich buyers that make up the current housing market are gaining a march on those who cannot currently gain the funds to enter the market.

Perhaps it would be better to limit borrowing overall, by raising the Capital Adequacy requirements, rather than limiting mortgage borrowing only.

* in my head pretty much, and as yet (as ever...) not yet fully formed

Edited by Timm

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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�

But the whole point of the proposed regulations is to deny first time buyers. It's been conclusively proven that not everyone who wants a mortgage is in a good position to take one on, or chose one they can manage. With the levels of moral hazard we have any regulations will be there to stop these people getting those mortgages... stupid.

I should be allowed to borrow as much as someone wants to lend me. And if I don't pay it back, they should lose.

We don't need regulated lending, we need to stop bailouts.

Ultimately though, this is the important point. Agreed.

edited to fix quote

Edited by Parkwell

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I suspect the apparent U turn was insisted upon by our negligent government. There is clearly no intention thus far to apply any such controls. Controls that were routine in the decades before new labour came to power when a 10% deposit was mandatory.

Rubbish. There were no 'controls' before 1997.

I had a 99% mortgage in 1988 with the Woolwich.

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I should be allowed to borrow as much as someone wants to lend me. And if I don't pay it back, they should lose.

We don't need regulated lending, we need to stop bailouts.

Should, yes. 100% agree.

But unhappily, that is not the world in which we live*.

*edit: or is it, now?

Edited by Timm

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Yes. I posted on this a while back

FSA - Strict mortgage limits no desirable

Particular emphasis was put on the plight of first-time buyers, who will apparently suffer if income multiples are limited. The fact prices would fall to match these multiples seems to have either passed them by or they're actually more concerned with maintaining high prices. My money is on it being the latter. The FSA is politically motivated after all.

I missed your previous post unfortunately.

Yes - I agree entirely - this is a property price prop. There is no intention whatsoever to 'help' first time buyers - after devastating their chances of ever getting a home - it's now the usual case of saving political skins dressed up as altruism.

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Good post, jaydee.

Just underlines the world of venality, lying and broken promises we live in. The authorities will say anything to win the moment, or get the headline, without any intention of ever fulfilling their promise. There isn't a single shred of decency or principle left.

The sooner these corrupt b@stards are out, the better.

Thanks juvenal.

Agree with all you say. Sadly - though they will be replaced by similar opportunists. The truly dispiriting aspect of all this is I cannot see a future of anything that will be much different.

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These proposals are still missing the point.

There are three main criteria which should be applied :

- No more than 80% LTV without insurance paid for by the borrower.

- No more than 32% MSR (mortgage service ratio) for a 5 year fixed, repayment mortgage amortized over 30 years for all borrowers seeking a LTV > 50%.

- No more than a 40% DSR (debt service ratio) including all debts for all borrowers.

Three very simple rules which will quell much of the specualtive fervour in this market .....

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I should be allowed to borrow as much as someone wants to lend me. And if I don't pay it back, they should lose.

We don't need regulated lending, we need to stop bailouts.

Sure that'll work. Once stung properly - lenders will self regulate like never before - same result - better method.

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Rubbish. There were no 'controls' before 1997.

I had a 99% mortgage in 1988 with the Woolwich.

Perhaps I should have said - 'self regulated' rather than 'controls' - but arguably they amount to the same thing in this context.

My mortgage was pre-sub prime - taken out in 1978 when all the lenders I tried - and there were quite a few - were only offering 90% LTV. Legal advice then also confirmed the 10% deposit requirement.

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"Where will my deposit come from for my 100% mortgage?

The deposit comes from the lender; the solicitor will arrange to draw down the deposit from the lender when they legally require it."

From clickngo mortgages that Jaydee pointed out......... :blink::blink:

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These proposals are still missing the point.

There are three main criteria which should be applied :

- No more than 80% LTV without insurance paid for by the borrower.

- No more than 32% MSR (mortgage service ratio) for a 5 year fixed, repayment mortgage amortized over 30 years for all borrowers seeking a LTV > 50%.

- No more than a 40% DSR (debt service ratio) including all debts for all borrowers.

Three very simple rules which will quell much of the specualtive fervour in this market .....

Very interesting points LuckyOne. A more sophisticated approach - but perhaps slightly less easy to apply.

What would stop borrowers who initially complied with the 40% DSR from loading up on debt after the mortgage was approved - some sort of monitoring system? What would happen to the 32% MSR when the lenders terms changed or interest rates rocketed as they did in the late 70's and early 80's? - I know this would be a concern with the 'basic' proposals also - but the simplicity of a 3x multiple may ensure it's universally understood and possibly easier to manage. Finally - I assume insurance premiums would rise to reflect the LTV - so perhaps for example 100% or 120% LTV would be possible - but prohibitive and then possibly also tempered by the DSR.

Also - I suspect there could be many artful work arounds applied to facilitate the success of the 'financial services sector'. But - if it could work to bring down prices it would be great. I don't believe for one second though that is what our great leaders want - in the absence of the industry of the past and now the absence of financial sector revenue - they want consumption, consumption and more consumption - that doesn't fit with property prices falling to realistic levels - as the election is less than a year away.

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The FSA said back in April that they were going to publish their decisions on recommendations for the mortgage market in September of this year. Is this now not the case?

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Yes. I posted on this a while back

FSA - Strict mortgage limits no desirable

Particular emphasis was put on the plight of first-time buyers, who will apparently suffer if income multiples are limited. The fact prices would fall to match these multiples seems to have either passed them by or they're actually more concerned with maintaining high prices. My money is on it being the latter. The FSA is politically motivated after all.

F*CK~ING MORONS.

Bankers Pyramid SCAM - http://gregpytel.blogspot.com/2009/04/larg...in-history.html

Edited by eric pebble

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I should be allowed to borrow as much as someone wants to lend me. And if I don't pay it back, they should lose.

We don't need regulated lending, we need to stop bailouts.

Correct.

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The FSA said back in April that they were going to publish their decisions on recommendations for the mortgage market in September of this year. Is this now not the case?

I don't know. The correspondence I quoted from them was dated July 15th - so perhaps September is possible. I suspect though that any recommendations will attempt to 'stretch' mortgage borrowing to meet still elevated property prices rather than cap borrowing to bring them down. Prepare for more hot air for the property balloon.

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we are currently reviewing our regulation of the mortgage market

:lol::lol::lol:

Please stop, my sides hurt.

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The three times salary and 5% deposit mortgage borrowing regulation apparently to be introduced with some urgency by the FSA in the spring of this year (see the link below) seems to have been abandoned.

http://www.telegraph.co.uk/finance/persona...-borrowing.html

A recent request to my MP to enquire as to why the FSAs proposal for mortgage regulation appeared not to have been implemented, elicited this response from the Director of Retail Policy & Conduct Risk at the FSA:-

“The FSA has not proposed any such limits. Rather, we are currently reviewing our regulation of the mortgage market. As part of this review we are still considering whether we should implement loan-to-income thresholds or require minimum deposits. Later this year we will publish a Discussion Paper setting out our viewsâ€.

What a breathtaking contradiction. Or was it simply highly imaginative reporting by the Daily Telegraph?. Or was it because the FSA announced without approval from #10? … if so, so much for independence. Still considering! why?. Thresholds or deposits - why not both?. Discussion Paper - to be discussed (and decided) by whom?. I sense a determined playing for time by this government via a deliberately ham strung FSA.

I suspect the apparent U turn was insisted upon by our negligent government. There is clearly no intention thus far to apply any such controls. Controls that were routine in the decades before new labour came to power when a 10% deposit was mandatory.

In spite of the misery caused by excessive and liar loan lending, financial companies are still ready and seemingly eager to offer 100% + mortgages, their web sites bristle with the ‘benefits’ this will bring to first time buyers and re-mortgagees, one example of many is mortgage broker John Charcol www.charcol.co.uk ,another, clickngomortgages www.clickngomortgages.co.uk.

One would have thought, that such brazen touting for high risk business - by the sector that played such a large part in own collapse, would have been banned.

I urge all who have an interest in returning property prices to reasonable levels to take it up with their MPs and perhaps also to write to the media asking (no - perhaps demanding would be best) that the perfectly sensible and urgently needed FSA proposal - so enthusiastically reported earlier - be implemented without delay.

You need to be consistent with regulation. Either have rules like 3 x salary plus a deposit, or, if you have no rules, let those that get it wrong go bust. What you cant do is what the government have done, and let them have it both ways, no rules and free bailouts.

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I should be allowed to borrow as much as someone wants to lend me. And if I don't pay it back, they should lose.

We don't need regulated lending, we need to stop bailouts.

...are you dazed and confused?.......you are right about the bailouts, if they had lent more responsibly and with forward foresight things would have been very different, there would have been far more valid and warranted winners and the losers would have not been given the chance to lose.

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