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CML slates Lib Dem SafeStart proposal as too prescriptive

The Council of Mortgage Lenders says the Liberal Democrats’ proposed SafeStart mortgages would be too prescriptive.

Earlier this month the Lib Dems announced their idea of a standard five-year, no-fees, no-frills fixed rate mortgage product aimed at providing stability to the market.

But a CML spokeswoman has criticised the idea.

She said: “I don’t think we want to be this prescriptive about mortgage products.

“What is more important is to see a return to conditions whereby there is adequate funding to a mortgage market that offers a range of products, so all creditworthy borrowers have access to a mortgage that suits their individual needs.”

SafeStart mortgages would be offered with no fees and at an LTV of 85%. Based on a rate of around 4.5%, the LTV would fall to 75% after five years provided borrowers kept up payments.

The Lib Dems have dubbed their product “an Aldi mortgage rather than a Waitrose one”.

Funding would be provided in the form of guarantees which the party says would come from insurers or possibly the government. Insurers would offer guarantees against the depth of house price falls rather than the asset quality of each mortgage.

Lord Oakeshott, the Treasury spokesman for the Lib Dems, said: “We are trying to design a safe mortgage that will be the default option every lender should offer.

“If we are going to give government a guarantee it should be for mortgages that are safe and solid. We should not write a blank cheque for all mortgage products.”

The plan has been welcomed by the industry although questions over funding remain unanswered.

Peter Williams, executive director of the Intermediary Mortgage Lenders Association, said: “The concept of a standardised mortgage with characteristics that are considered safe is a good one.”

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