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BSA 2011: FSA backtracks on 25-year affordability

Robyn Hall

May 4, 2011

Speaking at the annual Building Societies Association Conference in Birmingham today, FSA director of conduct policy, Sheila Nicoll, said: “We’ve acknowledged it may not be necessary to consider affordability over a 25-year period as we had originally suggested.

“We don’t want to stop people who can afford mortgage from getting them. But we do want to have affordability at the heart of all mortgage lending. We want lenders and borrowers to act responsibly.”

She said the FSA would publish a complete set of policy proposals in the summer reflecting “the whole of the Mortgage Market Review” which would be followed by a “full indicative impact assessment” and further consultation with the industry and interested parties.

She added: “I would stress that nothing is decided yet and we haven’t reached any final conclusions. We do want an open debate and have demonstrated we’re willing to listen.”

She also revealed that the FSA would not implement any MMR changes before the year end and would not risk damaging the mortgage market by imposing changes before the economy had strengthened.

She said: “We will take into account the overall economic environment when considering the timing of the new rules coming into force and only introduce those rules when we think the mortgage market is healthy enough to absorb the changes. This will not be before 2012.”

She also said the regulator had never proposed banning interest-only mortgages and that it was “not expecting you [building societies] to pre-empt any possible changes”.


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