Housing Minister Warns FSA Not To Derail Recovery

HAMISH_MCTAVISH

It seems the Tory housing minister has had a bit of an epiphany lately...

New rules to clamp down on irresponsible mortgage lending must not be drawn so tight as to shut thousands of buyers out of the market and deepen the house price recession, the housing minister is to tell the City watchdog.

Grant Shapps will use a meeting next week with Hector Sants, head of the Financial Services Authority, to urge that its review of lending practices not be so severe as to exacerbate an already difficult situation for would-be homebuyers.

The proposals are designed to stop a repeat of the irresponsible lending during the housing bubble. But they have prompted a political backlash with one member of the Treasury select committee, Labour MP George Mudie, warning that the FSA was unleashing a “reign of fear on mortgages”.

Mr Shapps told the Financial Times that he did not want to see banks going back to their old ways and lending indiscriminately.

However, it would be a mistake to “bolt the door” when the housing correction had already taken place.

Mr Shapps said that the FSA should steer away from “micromanaging” what should be a competitive market. “The problem is that, at the moment, it is not competitive enough.”

Mr Shapps will tell Mr Sants that the government wants the market to be regulated but not in a “product by product” way. “I don’t want to snuff out innovation in the mortgage market.”

Mr Shapps has been under pressure to justify his planning policies, which have seen the withdrawal of centralised targets introduced by the previous Labour government. Some experts have suggested that as many as 100,000 new homes have not been built as a result.

But the minister told the FT that the low level of housebuilding in Britain this year was mainly down to the parsimony of bank lenders.“The building figures are the lowest for peacetime since 1924, but if you ask the housebuilders what the main problem is, they say mortgage supply, meaning a lack of people to buy their products, planning is only second or third on their list,” he said.

http://www.ft.com/cms/s/0/385e08c0-1464-11e0-8d8f-00144feabdc0.html#axzz19hJ86ziW

Excellent news.

And bears, it seems that light you saw at the end of the tunnel when the Tories were elected, was just another train coming.;)

twadge_face

We'll see what happens WHEN it happens and not before.

Lip service, talk is cheap, etc. etc.

Apart from when it suits MY pov.

A._Badger

What would be far more useful would be if young Master Shapps shut the whole damned thing down. The FSA bears a lot of responsibility for the mess we're in.

IronWolf

How is that excellent news? The FSA is an independent non-governmental body and doesn't listen to what junior ministers think.

myhouse_2

IronWolf wrote: »

How is that excellent news? The FSA is an independent non-governmental body and doesn't listen to what junior ministers think.

In theory. In reality I suspect we'll get a damp squib of measures announced by the FSA such as max LTV of 95%.

Graham_Devon

Think you are looking into this a bit too little, and getting overexcited Hamish.

Mr Shapps will tell Mr Sants that the government wants the market to be regulated but not in a “product by product” way. “I don’t want to snuff out innovation in the mortgage market.”

Now, I know you highlighted the bit you liked, but just before that, it said he DID want regulation in the market, but not in a product by product way.

At the moment we have two different people with two different thoughts....

The first, those involved in the housing market. From builders, to landlords, to estate agents. They all say the problem is mortgage lending is not what it was.

On the other side of the coin, the actual people who would be taking the mortgages, the buyers, are saying it's the house prices, too expensive. Of course, some will blame mortgages, as some blame lending for not lending them enough to buy a range rover instead of a mondeo. You will always get those people.

I think it has to be accepted that the lending up to 2007 was stupidly lax. It also has to be accepted that it's now reverted the other way. HOWEVER, the banks are also being told to pay back loans.

You simply cannot lend money you do not have, especially in a market where the asset you are secured on is highly likely to fall in value. That's the biggest problem. Not mortgages per se.

wotsthat

New rules to clamp down on irresponsible mortgage lending must not be drawn so tight as to shut thousands of buyers out of the market and deepen the house price recession, the housing minister is to tell the City watchdog.

Lending is either responsible or it's not - he'd be posturing in exactly the opposite way if he heard of a single irresponsible lending example.

I think it's called wanting to have your cake and eat it.

chucky

Graham_Devon wrote: »

You simply cannot lend money you do not have, especially in a market where the asset you are secured on is highly likely to fall in value. That's the biggest problem. Not mortgages per se.

complete and utter rubbish.

banks do have money, it's more profitable to lend £100m on a 3% margin than lend £500m a year with a much smaller margin to people with 75% LTVs.

the risk factor isn't the major driver of the amounts that they lend.

Emy1501

The FSA do not need to do anything at the moment as the Lenders are doing their job for them at the moment. The risky types of borrowing which were available pre 2008 have pretty much disappeared.

When we looked 3 months ago it was easier to get a large mortgage than it was in 2004. 5x joint was available from a number of lenders. As long a one has at least a 10% deposit, is able to prove earnings and a good credit history getting a mortgage at a reasonable rate is not a problem.

markharding557

A._Badger wrote: »

What would be far more useful would be if young Master Shapps shut the whole damned thing down. The FSA bears a lot of responsibility for the mess we're in.

It is irresponsible greedy lending and the fools who fell for it which is responsible for the mess.

A._Badger

markharding557 wrote: »

It is irresponsible greedy lending and the fools who fell for it which is responsible for the mess.

Wrong. It is the above plus the failure of the FSA (in other words the previous shower of a government) to properly regulate the market.