This article has been taken from the NAEA newsletter and talks about house selling and its marketplace in the foreseeable future:
Wanted: ‘boring’ housing market
Lynda Blackwell, mortgage policy manager at the Financial Services Authority, has called for a ‘boring’ and ‘predictable’ housing market.
In a speech at the Building Societies Association’s annual mortgage seminar entitled ‘The future landscape for mortgage regulation’, she said the FSA agrees with housing minister Grant Shapps’ recent comments when he said we need a ‘boring’ and ‘predictable’ housing market.
Ms Blackwell said that during the boom period 1997 to 2007, there was actually an overall reduction of almost 160,000 in the number of households with a mortgage.
By contrast, mortgage debt rose by 200% in the same period, partly due to increased investment in buy-to-let and remortgaging.
In countries where lending restrictions were not eased as much as in the UK during the ‘boom’ years such as Canada and Australia, they have not seen as many repossessions.
The FSA believes that the stricter affordability checks will have the effect of encouraging consumers to consider their ability to repay the mortgage more carefully and make them more responsible. Borrowers will no longer be able to self-declare income and will have to convince a lender that their stated income is indeed real.
Consumers will also have to think through their budget to provide information to help the lender properly understand their income and outgoings.
She said the FSA has decided against imposing strict loan-to-value thresholds because of the potential impact on consumers. Other decisions on lending restrictions will be included in a consultation paper this month.
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