Mortgage reform is needed - but it's the detail that matters

26 May 2011

Responding to Shelter's release today of the results of a YouGov survey on whether mortgage regulatory reform is needed, the Council of Mortgage Lenders expresses surprise that Shelter seems unaware that mortgage lenders do, in fact, support reform. However, it is the detail of that reform that needs care if undesirable and unintended impacts are to be avoided.

Unsurprisingly, Shelter's findings found that 87% of respondents agree with the general statement that lenders should only give loans to borrowers who can show they can afford it. The CML agrees too, and also agrees with the three principles of affordability tests, income verification, and interest rate stress testing.

The CML also agrees with Shelter that government should listen to consumers, as well as lenders and others, on housing issues. That is why the CML funded the extensive independent research undertaken by Policis last year involving both quantitative surveys and qualitative focus groups among various different types of consumers, which found that consumers' views are complex and varied, on the one hand balancing support for tighter regulation while on the other hand being reluctant to see good borrowers unnecessarily excluded from achieving home-ownership.

CML director general Michael Coogan said:

"The question is not whether to implement changes to mortgage regulation, but when and how. Given the continuing subdued nature of the mortgage market and the tight criteria still prevalent, there is no rush and it is far better to ensure that UK and European regulatory changes are coherent and implemented in tandem.

"Far from bowing to the banking lobby, as Shelter puts it, a measured approach from regulators and government is simply good sense in a market where there are as many risks from too much regulation as from too little."

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