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FSA rules have not achieved sustainable housing market

Regulation by the Financial Services Authority has resulted in a zero contribution to a sustainable housing market, and if anything has worked against it, says Halifax.

Speaking in Monte Carlo, Alan Cleary, director of Halifax Intermediaries, told delegates that individual government policies could only be seen as successful if judged in their own terms.

Indeed, he says, only recently the Office of the Deputy Prime Minister, in a housing research paper, made the comment: “Most fundamentally the housing system as a whole has not become more robust, responsive and self sustaining.”

He went on to say that there have been too many undesirable and unintended consequences as a result of government policies which could be seen as an unsophisticated series of trade-offs. FSA mortgage regulation, he says, has made zero contribution to a sustainable housing market.

Worryingly, Halifax Intermediaries parent company HBOS also forecasts that there will only be 920,000 property transactions this year – the first time that the figure has fallen below the million mark in a long time.

But Cleary says: “We still believe the possibility of a hard landing is remote. Yes it’s true that there are mixed signals but it looks likely that consumer confidence will recover rapidly.

“In the early 1990s lenders pulled Britain through by adapting to sustain the market with neutral and negative equity products.

“Since that time, lenders have been innovative in assessing new sources of capital to fund the market. And the rise and rise of mortgage intermediaries has been key to improving access and choice for borrowers.

“Intermediary distribution has facilitated new entrants and successful third party administrators such as Homeloan Management.”

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