MPs debate MMR in House of Commons
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The Mortgage Market Review was debated in the House of Commons last night, with MPs putting forward their arguments against the proposals to Mark Hoban, financial secretary to the Treasury.
Conservative MP Robert Syms started the debate and argued that in its current form the MMR will have a disastourous effect on the economy, borrowers and first-time buyers.
But Hoban argued that the MMR is an essential step to ensure that both consumers and lenders are protected.
Syms says it is crucial that the FSA recognises that in the context of the current financial crisis, problems in the European and the UK economies today are primarily the result of liquidity and structural issues arising from financial markets.
He says: “The market failures that the MMR is designed to address affects only a small number of lenders that were in the market. Some of these are no longer active.”
Syms also argued that the FSA proposals are not balanced and take a patronising view that customers need protecting from themselves.
He called for the MMR to make it easier for smaller lenders and building societies to operate in the mortgage market.
He says: “We have to very careful that reforms of any kind will not make it more difficult for those who have had short-term difficulties to stay within the market and remortgage.
“If we get it wrong, it will be disastrous, and we will all find people in our surgeries who cannot understand why a few years ago they got a mortgage and now they cannot.”
John Woodcock, MP for Barrow and Furness, joined the debate, saying smaller lenders such as the Furness Building Society did not play fast and loose but feel they are being penalised by the proposals.
Marcus Jones, MP for Nuneaton, also expressed concern about a lack of availability of mortgages up to 95% LTV.
He says: “The bigger issue is about lenders ensuring that they do not over-expose themselves to such loans. They should keep them proportionate within their mortgage book to make sure first-time buyers gain that vital access to mortgage finance.”
In response to the criticism, Hoban told the Commons that there is a lot of concern about the MMR, but there is also a lot of misinformation.
He says: “Increased lending can force up house prices beyond the reach of those who want to get on to or move up the housing ladder, putting home ownership further and further out of reach for many.”
Hoban says the government is taking action to support mutuals and he wants to see a level playing field in regulation between big banks and societies.
Hoban adds: “We do not want lenders to put their solvency at risk through aggressive lending.”
But he adds: “Nothing is set in stone. The FSA has made it absolutely clear that it will assess fully the potential impact on the market before implementing any rule changes.”
He says the FSA and the Treasury have held a number of discussions with the European Commission on the proposals and will ensure that the timetable for refining the proposals are consistent with developments in Europe.
Hoban adds: “The MMR is an essential step to ensure that both consumers and lenders are protected, but that will always be balanced with the need to ensure innovation and competition in the mortgage market.”
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Readers' comments (7)
Jonathan | 18 Jan 2011 2:31 pm
Oh, but I thought the FSA was being disbanded! So why are the FSA and Treasury having discussions?! Another U turn by the coalition
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Tom | 18 Jan 2011 3:24 pm
No doubt about it, Mark Hoban is a Superior Being, a masterstroke! By protecting borrowers to this extent he will ensure there are no longer any borrowers qualifed to have a mortgage. Total borrower protection!! Also, without any borrowers there will not be a need for any lenders, thus protecting their solvency risk. Total stability in the housing market will be achieved, there won't be one. Absolutely brilliant!!!
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Steven Balmer | 18 Jan 2011 3:29 pm
What does it matter what they say about consultation when the main lenders are adopting policies they want introduced now anyway. What is Mark Hobans actual agenda? How can he defend the position on MMR and RDR anyway? He is obviously the FSA's government man and I would ask the question why? What has he been promised by the bankers to single handedly argue pro FSA when all other back bench MP's cross party are pointing out the issues.
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Dave | 18 Jan 2011 4:41 pm
We must be grateful for small mercies I suppose but the Commons debate was hardly prime time!
It started at 10.41 p.m. and ended at 11.06 p.m. so what they learned from 25 minutes at the end of the a long day can only be conjectured.
Still, it's better than nothing - but we must all still respond to CP10/28 if we don't want the FSA to steamroller their crazy proposals through.
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John Steed | 19 Jan 2011 9:14 am
I notice Hoban stated that the FSA and the Treasury have been speaking to the European Commission. I bet they have-to get their orders probably.
I have supected for a long time that the EU is determined to re-shape our housing market to be more in line with Europe (less ownership more rental). I fear that with this very weak government the EU are winning the day.
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Sean Piper | 19 Jan 2011 12:14 pm
Like many others, I have written to my local MPs, in both my home and work constituencies, expressing my concerns about MMR. Both MPs surprised me by responding to my letters and both assured me that they would raise my concerns in the Commons.
I am sure that I cannot be the only person who has contacted an MP, and I'm sure many others have been asured that their concerns would be raised. How then is it possible that the Commons debate lasted a paultry 25 minutes? Are our MPs actually listening to our concerns and do they really understand the wider issues?
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Glen McKeown | 19 Jan 2011 8:41 pm
It is good that Parliament are at least pretending to understand that Reviews may just affect their constituents. But there is nothing in the report that anyone could not have written BEFORE the debate. The problem with Parliamentary debates is that the rhetoric is more about point scoring than discussion.
So we have MPs making vague noises about matters about which they have very little understanding. John Woodcock gives the game away by being (vague) spokesman for his local Building Society, not his constituents.
The response from Mark Hoban is pure Civil Servant speak - everything is alright and discussions are ongoing.
The whole process stinks to high heaven. There is probably a good basis for having a Review; nothing can ever be set in stone. The corruption lies in the fact that the agenda is almost certainly set behind the scenes; the FSA will listen, and hear nothing; there will be no meaningful dialogue with practitioners; and consumers remain at the end of the food chain. Regulation will be easier for the regulator and the consumer can do what they like because the whole process is to re-instate all the civil servants who are allegedly being made redundant in the next year or two.
And to Sean Piper - it is not the MP responding, it is his staff. MMR does produce votes, so there is only a small probability that any MP actually has any idea of what is happening. Mine certainly doesn't.
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