Saturday, November 27, 2010

The Mortgage Market Review is being smothered

I would have been denied mortgage, says minister

'The Housing Minister, Grant Shapps, says he himself would have failed to get a mortgage had new proposals for the mortgage market drawn up by the City watchdog been in effect when he bought his home. Speaking at the National House-Building Council's annual lunch, Mr Shapps said: "I think it was about the moment I realised that I wouldn't have a mortgage if the Mortgage Market Review (MMR) changes went through that I kind of thought that this might be going a step too far."' Needless to say, the CML are delighted by Shapps return to the fold.

Posted by quiet guy @ 05:27 PM (1966 views)
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10 thoughts on “The Mortgage Market Review is being smothered

  • Oh dear…

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  • Maybe Shapps is a bad credit risk, after all MPs have been rather dishonest of late.

    Either way it is staggering that an MP can be persuaded against legislating based on the notion that they themselves might be negatively affected by it!

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  • Just goes to show how high house prices have been encouraged to rise.

    That’s the problem that this reform has highlighted.

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  • Where’s the Shapps fan club now then?

    Tosser.

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  • Don’t worry, the FSA is independent. Like the Audit Commission (abolished) and the Bank of England Monetary Policy Committee…

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  • What a useless shill

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  • Shyster

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  • Well as i said if you had read the post i made the other day or watched the video, you would have realised that Turner is – almost single-handedly trying to stop a new credit bubble from being created. As i said there the FSA’s position is draconian. The reason?

    Well if you want to sell something you might accept 20quid but you dont offer 20 quid for starters do you?

    ” Lord Turner, its chairman, reiterated before the Treasury Select Committee earlier this week, that the sort of cheap and easy credit available during the run-up to the financial crisis should not be seen as a good thing.”

    So yes you start with very stringent criteria and then water them down. To what extent the watering down is , is the real question.

    So what EXACTLY are the FSA’s key proposals……[next post]

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  • http://www.fsa.gov.uk/pages/About/What/mmr/index.shtml

    “The principal changes proposed in our paper are:

    Reducing the number of unaffordable mortgages and the unsustainable growth of riskier products by banning self-certification and requiring income verification for all mortgages.

    Making lenders ultimately responsible for affordability assessments. An assessment of a consumer’s free disposable income will become a fundamental element in the process of providing a mortgage.

    Strengthening our arrears rules and banning firms from imposing arrears charges on borrowers who have an agreed arrangement in place.

    Improving standards of fitness and propriety among individual advisers and cracking down on rogue individuals and mortgage fraud by expanding the FSA’s Approved Person regime to cover several thousand mortgage intermediaries.

    Putting forward the case for extending the protection available to customers by extending our scope to cover buy-to-let and second-charge lending (although this is a decision for the government to make).

    Considering banning mortgage loans to borrowers who have certain combinations of risky characteristics. We haven’t ruled out loan-to-income or loan-to-value caps in the future and are opening the debate on restrictions on equity withdrawal.”

    For some bedtime reading (98 pages) http://www.fsa.gov.uk/pubs/cp/cp10_28.pdf

    “The FSA’s Consultation paper CP10/28 is entitled ‘Mortgage Market Review: Distribution & Disclosure’. It was published in November 2010 and the period for consultation responses closes on 25 February 2011.”

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  • “Joel Hills, Sky News: The IMF recently described the UK housing market as worrisome. Are you worried about the UK housing market?

    Mervyn King: I worry about many things. I wouldn’t say that was the one that was top of my list; I think the world economy is the one that worries me most. We have seen a surprisingly buoyant housing market, given that activity is about half what it was at the peak of the levels of activity before the crisis. We’ve seen initially almost an effective closure of the mortgage market for six months. Now the banking sector’s coming back into it; mortgage rates are clearly well above Bank Rate.

    But I think there are two very instructive differences between the US housing market, with which perhaps they’re more familiar, and the UK housing market. The first is that house prices in the UK did fall in the immediate wake of the financial crisis, but then recovered. They are down 1% on the past three months – some signs of a weakness in activity and prices. But we’ll have to monitor where that goes.
    In the United States house prices are still 26% below their peak. Here’s it’s about 13%. That’s a big difference.

    The result of that is that, whereas fewer than 5% of homeowners in this country have negative equity, in the United States it’s 23% – enormous difference. The result of that is that mortgage arrears, defaults and repossessions are at record post-War levels in the United States, and here they are markedly lower than they were in the ’80s and ’90s – lower than the ’90s, and falling.

    So, yes, we’re always worried, and I don’t predict – I can’t predict what will happen. But we will monitor what happens and take action to keep inflation on track to meet the target.

    Joel Hills, Sky News: I ask the question because in future potentially you’ll have the power to intervene when you perceive asset bubbles to be forming. I was wondering if you had the power today, whether you or any other member of the Monetary Policy Committee – given that there are a range of views and judgements – would choose to intervene today?

    Mervyn King: The Monetary Policy Committee will not have responsibility for macroprudential policy. That will go to a Financial Policy Committee. The members of that haven’t been appointed yet. So I do not presume –

    John Hills, Sky News: You will be on it, would you do that?

    Mervyn King: – I do not presume to speak on their behalf. I will merely speak about the objective, which is not to pr1ck asset bubbles; it is to take actions to maintain the stability of the financial system. That’s a very important distinction.”

    http://www.bankofengland.co.uk/publications/inflationreport/conf101110.pdf

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