Fsa Mortgage Reforms Branded A 'catastrophe'

[athom]

FSA mortgage reforms branded a 'catastrophe'

The city watchdog came under renewed fire over its mortgage reform plans yesterday, with another housebuilder warning of a devastating impact on the housing market if the Financial Services Authority refuses to change course and the builders' trade body accusing it of "driving first-time buyers" away from the market.

MJ Gleeson, which operates mainly in the North of England, said sales were running at half the levels they should be as first-time buyers were able to secure financing from banks.

That view was backed by the House Builders Federation which said the strict affordability tests being proposed by the Financial Services Authority would be "catastrophic" for a housing market which is already showing signs of stress. Official figures show that mortgage approvals are running at half the historical run rate as prices spiral down again.

There is mounting controversy over the FSA plans, which the Council of Mortgage Lenders said would effectively have banned 4 million mortgages from being sold had they been imposed over the past five years, even though 95 per cent of the borrowers who took out those loans were currently meeting their obligations.

MJ Gleeson said market conditions were improving, with visitors to its site up more than 15 per cent, private completions up 26 per cent and overall unit sales up 47 per cent during the three and a half months to 19 November. But it lambasted "the policy vacuum created by the Coalition Government's failure to clarify the details of its proposed changes to the planning system" and warned that the lack of mortgage availability was badly hitting sales.

Alan Martin, MJ Gleeson's chief operating officer and finance director, also said there was a "huge pent-up demand" in the country for housing that the FSA's planned restrictions "will not allow to be fulfilled".

He added: "If they insist on putting these rules in nothing will ever change because the availability of mortgages can't increase. The banks are wanting people to save for deposits up to £50,000, which is unrealistic. If people have a blemish on their credit histories they will be refused. If people haven't had credit before they will be refused because of the lack of information about them."

Mr Martin said his company was considering holding a series of site visits for local MPs in the hope they would persuade the Government to intervene. The CML has also called for ministerial intervention.

The FSA declined to comment on the latest criticism, pointing only to a speech made by Sheila Nicholl, the director of the its conduct policy division, on Thursday. She said then: "Any suggestion that the FSA is determined to implement a particular set of regulatory measures, irrespective of their impact on the economy and the market, is a completely false view and one which is not in any way consistent with either our statutory obligations or the positioning of the material we have published to date."

However, she defended the watchdog's Mortgage Market Review, arguing that regulators had found problems with the way home loans were being sold before the financial crisis. She said the role of the review was "to tackle the root causes of consumer detriment, whether actual or potential, and ensure that we have regulation that is fit for purpose across the economic cycle".

A Treasury spokesperson said: "The Coalition Government welcomes the FSA's Mortgage Market Review, and encourages interested parties to engage constructively in the consultation process. The Government will continue to work with the FSA, mortgage lenders and consumer groups to ensure a mortgage market that is sustainable for all participants."

http://www.independent.co.uk/news/business/news/fsa-mortgage-reforms-branded-a-catastrophe-2139289.html

4 million? How many mortgages were sold in the last five years?

I think the government have come to realise that the cheaper the housing costs are the less people need to earn and the more competitive the UK workforce can be. Well done them. Of course the problem is going to be once prices do come down many of us won't be able to get a mortgage anyway. How i'll laugh at the irony of it all

Edited November 20, 2010 by athom

[athom]

There is going to be a very difficult period for a bit while house purchase and rental costs are falling. People will be unable to save a deposit because rents are still high. If they stick to this plan i'd guess a large overshoot in HPC past the long term average house price while rents follow plus the time it takes for people to save enough for a deposit during the great depression. I suppose things will right themselves when deposit size becomes small enough for people to save, this might be the new thing that house prices are pegged to rather than 3x salary as it has been till now. That's enough guessing for one post

[athom]

EDIT: '95% currently meeting their obligations'.....well they would at these rates and degree of support wouldn't they.

Yeah really. Are they trying to say everything is all right?

[bricor mortis]

Talking of catastrophes, how did the FSA let the banks lend in this way to such a degree in the first place.

And how on earth did the FSA let RBS and BoS lend so much money to Ireland and to Commercial property in the UK. By all accounts, they have lent about E80bn to a population of just 4-5m. And they together with NAMA account for 2/3 of all lending to the troubled commercial property sector in the UK. Zombie would be a fortunate outcome imo.

Totally asleep at the wheel and now getting attacked for playing catch-up.

EDIT: '95% currently meeting their obligations'.....well they would at these rates and degree of support wouldn't they.

Some reasonable questions, I have another, how come the head of the FSA was earning £900,000 a year when everything went to hell on a handcart and he did not face any disciplinary sanction ?

[athom]

Some reasonable questions, I have another, how come the head of the FSA was earning £900,000 a year when everything went to hell on a handcart and he did not face any disciplinary sanction ?

Because he did the job he was being paid to do?

[South Lorne]

Some reasonable questions, I have another, how come the head of the FSA was earning £900,000 a year when everything went to hell on a handcart and he did not face any disciplinary sanction ?

...because he reported direct to the Chancellor Gordo the Clown who had no idea what he was doing and no people management skills ....he thought it was 'his' economic miracle......

[needsleep]

Gleesons weren't bothered when they could sell crap holes for £325k. They, the other builders, estate agents, sundry other VIs are the ones that destroyed their own cash cow and trapped millions of homeowners. They've got their argument completely the wrong way round - at affordable prices they could be bulk building now, perhaps even helping renew Britain's large stock of aging properties.

[exiges]

here is mounting controversy over the FSA plans, which the Council of Mortgage Lenders said would effectively have banned 4 million mortgages from being sold had they been imposed over the past five years,

The thing they fail to realise (or admit) is if liar loans hadn't been allowed people wouldn't have been able to borrow so much then house prices wouldn't have shot up .. meaning that people would have been able to get a mortgage without resorting to lying.

[erranta]

There is going to be a very difficult period for a bit while house purchase and rental costs are falling. People will be unable to save a deposit because rents are still high. If they stick to this plan i'd guess a large overshoot in HPC past the long term average house price while rents follow plus the time it takes for people to save enough for a deposit during the great depression. I suppose things will right themselves when deposit size becomes small enough for people to save, this might be the new thing that house prices are pegged to rather than 3x salary as it has been till now. That's enough guessing for one post

Which would prove all the persons predicting 50%+ falls correct!

[South Lorne]

The thing they fail to realise (or admit) is if liar loans hadn't been allowed people wouldn't have been able to borrow so much then house prices wouldn't have shot up .. meaning that people would have been able to get a mortgage without resorting to lying.

...yeah...but...Gordo wouldn't have had his economic miracle......

[juvenal]

'Mr Martin said his company was considering holding a series of site visits for local MPs in the hope they would persuade the Government to intervene. The CML has also called for ministerial intervention'.

Public transport and modest refreshments only for those MP's, please....

Edited November 20, 2010 by juvenal

[Bloo Loo]

Talking of catastrophes, how did the FSA let the banks lend in this way to such a degree in the first place.

And how on earth did the FSA let RBS and BoS lend so much money to Ireland and to Commercial property in the UK. By all accounts, they have lent about E80bn to a population of just 4-5m. And they together with NAMA account for 2/3 of all lending to the troubled commercial property sector in the UK. Zombie would be a fortunate outcome imo.

Totally asleep at the wheel and now getting attacked for playing catch-up.

EDIT: '95% currently meeting their obligations'.....well they would at these rates and degree of support wouldn't they.

I dont know, but I suspect the success of the "Peace Process" might have had an influence on lending policy.

likewise, the Shred did as he was told and was very well rewarded.

[leicestersq]

Yeah really. Are they trying to say everything is all right?

Exactly. 95% paying, which means 5% are not. That is a pretty high percent of non-payers, enough to drive the banks under. Add in the cost to the taxpayer of smi, and the hb subsidy, and you can see that the real cost of liar loans are far higher than this percentage suggests.

[NEO72]

So 95% don't have a problem paying their mortgage? Well thats ok then providing we keep base rates at 0.5% forever..

'kin tards.

I would like to think the government will see through their blatantly self-serving whining - however, wouldn't bet on it.

[bricor mortis]

Surely the FSA plan is going to be a whitewash to leave lending more or less unrestricted within the given market conditions with just a couple of sops thrown in to make it look like there is regulation and vigilant governence ?

[Bloo Loo]

Surely the FSA plan is going to be a whitewash to leave lending more or less unrestricted within the given market conditions with just a couple of sops thrown in to make it look like there is regulation and vigilant governence ?

its way too late...lending can remain unregulated because, at peak debt, there is no way to force it into a saturated market.

[Georgia O'Keeffe]

Surely the FSA plan is going to be a whitewash to leave lending more or less unrestricted within the given market conditions with just a couple of sops thrown in to make it look like there is regulation and vigilant governence ?

The FSA dont need to bring in this restriction, the market is restricting itself, the banks are restricting the lending because they cant offload it anymore, the FSA could dissappear and it will have no impact on whats happening, which is credit destruction and further contraction and further reduced lending ultimately leading to a reset, its the same spiral down as the spiral up, both are unstoppable cycles when they are setoff which is why they are historically very common but that doesnt stop everyone thinking its wont go parabolic on the way up because its different and we are smarter and that it wont collapse on the way down because its different and we are smarter

Edited November 20, 2010 by Tamara De Lempicka

[_w_]

http://www.independe...he-2139289.html

4 million? How many mortgages were sold in the last five years?

I think the government have come to realise that the cheaper the housing costs are the less people need to earn and the more competitive the UK workforce can be. Well done them. Of course the problem is going to be once prices do come down many of us won't be able to get a mortgage anyway. How i'll laugh at the irony of it all

That view was backed by the House Builders Federation which said the strict affordability tests being proposed by the Financial Services Authority would be "catastrophic" for a housing market which is already showing signs of stress.

They're absolutely right! But what should we choose: a catastrophic future for the housing market or a catastrophic future for the country as a whole?

Hmmm... decisions decisions... how much did builders contribute to the party last year?

Edited November 20, 2010 by _w_

[_w_]

its way too late...lending can remain unregulated because, at peak debt, there is no way to force it into a saturated market.

Would you really entrust your future to the traders who currently run our banks? After what they've done?

[athom]

Mr Martin said his company was considering holding a series of site visits lap dancing and free bubbly for local MPs in the hope they would persuade the Government to intervene.

I'm sure that's what he meant to say

Edited November 20, 2010 by athom

[athom]

Which would prove all the persons predicting 50%+ falls correct!

Well this aspect is more than any other a guarantee of a HPC, as we all know the mad HPI was entirely down to availability of credit so take that away and HPC is inevitable. Wages alone won't sustain prices as they are, unemployment is rising, wages for those in work are likely to fall, cost of living is going up, taxes are going up, no end in sight as we are still only entering the greater depression as we enter debt slavery. Anyone who doubts a HPC is around the corner needs their head examining.

[Cinzano Bianco]

So 95% don't have a problem paying their mortgage? Well thats ok then providing we keep base rates at 0.5% forever..

'kin tards.

I would like to think the government will see through their blatantly self-serving whining - however, wouldn't bet on it.

It's called lobbying, and it is a depressingly normal part of the way our country is run, and politicians line their pockets.

[Georgia O'Keeffe]

Well this aspect is more than any other a guarantee of a HPC, as we all know the mad HPI was entirely down to availability of credit so take that away and HPC is inevitable. Wages alone won't sustain prices as they are, unemployment is rising, wages for those in work are likely to fall, cost of living is going up, taxes are going up, no end in sight as we are still only entering the greater depression as we enter debt slavery. Anyone who doubts a HPC is around the corner needs their head examining.

and as you alluded to earlier so does anyone who thinks it will be easy (as in last 30 years easy) to get a mortgage if you get that sort of crash

[red]

The FSA dont need to bring in this restriction, the market is restricting itself, the banks are restricting the lending because they cant offload it anymore, the FSA could dissappear and it will have no impact on whats happening, which is credit destruction and further contraction and further reduced lending ultimately leading to a reset, its the same spiral down as the spiral up, both are unstoppable cycles when they are setoff which is why they are historically very common but that doesnt stop everyone thinking its wont go parabolic on the way up because its different and we are smarter and that it wont collapse on the way down because its different and we are smarter

Spot on.

Although I think your full stop key is missing...

[Redcellar]

5% not keeping up with obligations is HUGE!!!!

Current conditions are the most favourable to mortgagees in pretty much all of history too.

The arguments presented back up reasons to have to restrict lending, since the idiots making quotes on behalf of the CML clearly show that they need controlling otherwise they would be back in the mire they were rescued from. FSA won't back down on this, government will support them in this policy and stuff the VI's. The economy of the nation is the real vote winner. Everyone 'owning' a house but with no job prospects and collapsing taxes is now avoidable.

Prices will adjust downwards. Maybe not a big bubble bursting, more a long slow fart in the bath type of thing. The result will be the same, but the pain will seem less to those losing out. A slow adjustment will be less likely perceived as a dramatic loss in wealth. But with this new stance and capping/ control we have seen the peaks that can never be reached again IMPO.