FSA reported to be putting pressure on some lenders to adopt draft MMR
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Some lenders have reported feeling pressured by the Financial Ser-vices Authority to adopt the draft proposals in the Mortgage Market Review.
Ray Boulger, senior technical manager at John Charcol, says 2011 will see lenders tightening criteria and some of this will be down to the regulator.
In John Charcol’s housing and mortgage market report for 2011, Boulger says: “Any further tight-ening of criteria this year is in theory more likely to be down to lenders choosing to do so rather than being forced to by the FSA.
“However, some lenders have reported they are being pressurised by their FSA supervision team to adopt at least some of the draft MMR proposals.”
But a spokeswoman for the FSA says its rules are still in the con-sultation period and have not been finalised.
Robert Sinclair, director of the Association of Mortgage Interme-diaries says: “We are in the middle of a pantomime debate - the FSA is saying it is not telling firms to adopt its proposals because they are only at the draft stage, but we still have a number of lenders adopting them.”
Sinclair says smaller firms may feel they have to impose the mea-sures early if they receive an FSA visit but larger ones will not be intimidated and will argue they do not need to implement the pro-posals if they are in the draft stage.
Boulger also says lenders are failing to apply common sense to acceptable repayment strategies for interest-only.
He says: “The fact that one or two lenders may consider they have a problem with their interest-only back book is no reason to throw the baby out with the bathwater.”
The FSA’s latest work on interest-only found that of the 25% of residential mortgage borrowers with an interest-only mortgage, 90% had a robust repayment plan.
Last week Sir Richard Lambert, the outgoing director-general of the Confederation of British Industry, said now was not the time to be making mortgages harder to obtain.
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