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Lenders back regulation of second-charge mortgages

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by Gill Montia

Lenders are backing the proposed regulation of the second-charge mortgage market.

Responding to a Treasury consultation, the Council of Mortgage Lenders (CML) has also said it wants to ensure borrowers are sufficiently protected when mortgage books are sold on.

On second-charge lending, the body has restated its longstanding position that all residential mortgage lending should be regulated by the Financial Services Authority (FSA).

In addition, lenders agree that consumers may suffer when mortgage books are “sold on” and want the scope of the FSA extended to address this.

However, regulation should only apply when the new owners take day-to-day decisions on interest rates, charges, service levels, and arrears management, according to the CML.

Turning to buy-to-let lending, the Council’s members are opposed to FSA regulation on the grounds that this area of the UK mortgage market essentially involves commercial transactions with an investment dimension.

Regulation could therefore impinge on an “inappropriate range” of commercial transactions, while not addressing the issue of property investment advice (a key area that can result in problems for borrowers), or systemic risk in the buy-to-let lending sector.

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News posted: February 17, 2010

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1 Comment

  1. you are all out of touch with reality,
    first of all Eddy George brought down %
    rates when he should have put them up,
    driving-up House prices & attracting spec-
    ulators. then banks behaved like clowns
    Then had 2004 anti-private landlord Act
    Then HIP.s/HMO.s/outrageous Deposit Scheme
    plus Section 21 diluted,control of manage-
    ment taken from Landlord. Magistrates huge
    unjust fines.Do you still wonder what is
    wrong with Housing & the Economy.

    Comment by M Foley — March 9, 2010 @ 2:58 pm

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