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Written by rosalind renshaw

Proposed reforms to the mortgage market could devastate the housing industry from top to bottom.

The warning came from Michael Coogan, director general of the Council of Mortgage Lenders.

He attacked the Financial Services Authority over its Mortgage Market Review (MMR), currently out to consultation, which aims to tighten up on lending practices.

But in a ferocious attack, Coogan said that the MMR would blight Britain’s entire housing economy, reduce house prices and transactions, and stifle home-ownership aspirations across the nation, if brought in. 

Also hard hit – even more than now – would be the buy-to-let sector.

Speaking at the Future Housing Conference, Coogan savaged the FSA and spelled out what he called the ‘unintended consequences’ of MMR.

He accused the FSA of hiding behind ‘responsible lending’ when it actually meant no lending.

In his extraordinarily outspoken speech, Coogan also slammed the FSA’s prediction that house prices would fall, saying that making such a forecast was not part of a regulator’s remit. “I don’t think that it is the FSA’s job to predict price falls,” he said.

Talking about the housing market, he said so few lenders were actually already lending, the CML had struggled to find 30 lenders to “populate” its top 30 lender annual review. And this could get worse.

Coogan said the MMR was meant to be a comprehensive analysis on the part of the FSA, and an attempt by them to show they would not be “asleep at the wheel” in future. But, he said, the MMR was fatally flawed, was neither of these things, and should be evaluated before being brought in.

He said: “We would like to do more to ensure the FSA steamroller slows down or goes into reverse.” He said 11.4 million borrowers would become ‘mortgage prisoners’, unable either to move home or remortgage.

Coogan said he had no wish to return to 2007 when there was £367bn of mortgage lending. But he said that there was an opportunity – a very big opportunity – to home in on the £250bn potential borrowing now available after risks had been stripped out. But he said the FSA wanted to see no such level.

He said that first-time buyers would be affected, because they would need higher deposits and pay higher fees. They would be in their late 30s or older. Traditional first-time buyers would be priced out, but unable to qualify for social housing – even if there was enough social housing.

Self-certification mortgage borrowers would also suffer, with lenders increasingly unwilling to “do the paperwork” on the self-employed. 

“Normal customers?” said Coogan. They too will be increasingly turned away, if they have for any reason been credit impaired.

Interest-only mortgages, he said, will disappear. 

He said that even “ordinary” borrowers would struggle, as housing transactions would rely on them building chains of buyers and sellers in similar “ordinary” situations.

Coogan warned: “There will be fewer first-time buyers and fewer property investors. A lot of borrowers will be unable to move, because they will be mortgage prisoners. Transactions levels will fall further, if the MMR goes ahead.”

He added, obliquely, that CML research figures, to be made available shortly, will show that FSA presumptions are “extremely wrong”.


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    The FSA could actually be right? No gain without pain. Something has to be done, as left alone no-one is getting anywhere.

    It was the FSA that allowed us to get into this mess (negligence) and it was the CML who got us into this mess (took advantage for profit). After the horse has bolted comes to mind and it seems that going back to what we had before was/is afforadable and may only be the answer. No-one else has come up with a solution so far!

    • 27 September 2010 10:09 AM
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    Good for you Mr Coogan. This is a situation of no lending at present without huge deposits The FSA screwed up with the banks as they had no idea what to look for or how to find what was going wrong until too late. They are very good at jumping on the small man without just cause and they should not be giving an opinion on the market. They do should look to their own house to keep it in order. What qualifications does the FSA have for making predictions about house prices? What a bunch of morons and the quicker they are abolished the better.

    • 25 September 2010 10:15 AM
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    Michael Coogan is clearly wrong, all he wants to do is secure over priced housing for investors at the expense of future generations. The FSA is right with these reforms as it will produce a far more stable market. Yes prices will fall but that will be to traditional values. Deposits needed by first time buyers would thus be smaller. There will be some upheaval in the short term but things will get better with higher transactions after the price correction.

    • 25 September 2010 08:23 AM
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    Coogan is spot on - it's already started. The media will pick this story up in Oct & there will be a further drop in confidence.

    'Self-certification mortgage borrowers' -eh? no such thing anymore.

    • 24 September 2010 09:53 AM