In its News and Views, it says that apart from its recently launched consultation on arrears and possessions the FSA should make no further changes to the regulation of mortgages this year.
It says there is no short term risk if the regulator takes more time to reflect or analyse market data.
It says: “The current process of structural market adjustment should therefore be allowed to continue – alongside progress towards global prudential reform and improvements in the economic backdrop.
“A clearer understanding of the real causes of consumer detriment is needed. And before pressing ahead with further changes, the FSA will also need to apply rigorous cost-benefit analysis – informed by market data – to its proposed reforms.”
On the subject of whether lenders should check the income declared by the borrower in every mortgage application.
It sys it is more important that borrowers take out mortgages that are sustainable, and the FSA avoids introducing rules that exclude them unnecessarily from access to mortgages, and therefore to home-ownership.
It also wants to the FSA to draw a clear distinction between fast track and self-cert mortgages.