Housing minister Grant Shapps has come under fire from the Labour party for failing to respond quickly enough to the Mortgage Market Review.
Shadow housing minister Alison Seabeck says there are concerns that the Financial Services Authority’s clampdown goes too far, something Shapps admitted only two weeks ago.
But Seabeck adds: “Shapps has responded rather late in the day to this. It is not clear what pressure he has brought to bear on the chancellor to try and persuade the FSA to give some consideration to concerns voiced by the housing market about the impact of these proposals.”
Shapps says his officials are working closely with the FSA and the Council of Mortgage Lenders on the MMR and will continue to do so.
Last week Shapps again joined the MMR debate saying the measures must be proportionate and avoid unnecessary prescription.
In a written response to a question by Robert Syms, the Conservative MP for Poole, Shapps says the government shares the underlying objective of the MMR but wants to see the regulation support access to home ownership.
He says: “We want to see a regulatory framework that supports access to home ownership and new housing supply while preventing repossessions. The government believes the FSA’s changes must be proportionate and avoid unnecessary prescription on the mortgage industry.”
Seabeck adds that the private rented sector is being squeezed from both sides.
She says: “On the one hand there are the forthcoming changes to housing benefit and then there is the inaccessibility of mortgages for first-time buyers – this is something the FSA needs to bear in mind as it develops its proposals.
“Many young people who aspire to owning a home are having to reconsider.”
The MP says the issue is not party political and is about ensuring a functioning and responsible mortgage market.
But Ray Boulger, senior technical manager at John Charcol, says: “It’s pretty rich because the FSA started this process while Labour was in government. If Labour had consulted with the FSA properly we wouldn’t be in the situation we are now where even the regulator is backtracking.”