The new rules, which include tough restrictions on how much a person can borrow, are expected to be enforced next year.
They evolved after banks were accused of irresponsible lending, allowing home buyers to borrow more than the value of their home and take out interest-only mortgages without providing evidence of how they were expecting to repay the loan.
Michael Coogan, director general of the CML, said: “The golden age of home-ownership is over, for the moment.”
He defined the “golden age” as a more stable period in the housing market when demand met borrowers’ aspirations. It was when there was modest year-on-year growth in responsible lending and came before the housing bubble of 2006 and 2007.
Today, thousands of home owners are unable to find an affordable mortgage and the amount of lending provided every year remains significantly below the long term average.
Mr Coogan said the new rules would fail to revive the housing market, describing them as “fatally flawed”.
“Transaction numbers will fall further if the mortgage rules come in,” he said.
The proposals by the City Watchdog the Financial Services Authority are aimed at ensuring borrowers can afford their mortgage.
Lenders would be ultimately responsible for assessing whether a mortgage is affordable and ensuring that borrowers’ incomes are properly checked.
Mr Coogan told The Daily Telegraph that the measures would result in “lenders simply not lending” because loans would be too costly and the regulatory backlash would be too great.
He suggested interest only loans could disappear and there would be fewer first-time buyers, which help to prop up the rest of the market.
The new rules would also result in existing home owners being unable to move – so-called “mortgage prisoners”.
A low turnover in mortgages would see more people renting, while those already on the property ladder would move just once every decade rather than once every four to seven years.
The warning follows a new low in mortgage lending, with latest figures showing approvals dipping to just over £11 billion in August, the lowest summer level in a decade.
Some economists predict house prices could drop as much as 15 per cent from the beginning of 2010 to the end of next year.
A separate study by the CML suggested virtually everyone believes that Britain has housing problems, with young people unable to afford to step onto the property ladder and taking on too much debt to do so as the biggest issues.
Housing minister Grant Shapps said: “I have made clear that I will support the 1.4 million aspiring home owners whose ambitions are thwarted by a lack of mortgage availability. (AtW's comment: on ffs Shapps - the best way you can support those aspirations is to make sure house prices actually drop to become affordable)
“That’s why as a Government we're making efforts to tackle the record deficit we inherited, to ensure that interest rates remain low and to bring back a golden age of home ownership.”
Source: The golden era of home ownership is 'over', says mortgage boss - Telegraph
They evolved after banks were accused of irresponsible lending, allowing home buyers to borrow more than the value of their home and take out interest-only mortgages without providing evidence of how they were expecting to repay the loan.
Michael Coogan, director general of the CML, said: “The golden age of home-ownership is over, for the moment.”
He defined the “golden age” as a more stable period in the housing market when demand met borrowers’ aspirations. It was when there was modest year-on-year growth in responsible lending and came before the housing bubble of 2006 and 2007.
Today, thousands of home owners are unable to find an affordable mortgage and the amount of lending provided every year remains significantly below the long term average.
Mr Coogan said the new rules would fail to revive the housing market, describing them as “fatally flawed”.
“Transaction numbers will fall further if the mortgage rules come in,” he said.
The proposals by the City Watchdog the Financial Services Authority are aimed at ensuring borrowers can afford their mortgage.
Lenders would be ultimately responsible for assessing whether a mortgage is affordable and ensuring that borrowers’ incomes are properly checked.
Mr Coogan told The Daily Telegraph that the measures would result in “lenders simply not lending” because loans would be too costly and the regulatory backlash would be too great.
He suggested interest only loans could disappear and there would be fewer first-time buyers, which help to prop up the rest of the market.
The new rules would also result in existing home owners being unable to move – so-called “mortgage prisoners”.
A low turnover in mortgages would see more people renting, while those already on the property ladder would move just once every decade rather than once every four to seven years.
The warning follows a new low in mortgage lending, with latest figures showing approvals dipping to just over £11 billion in August, the lowest summer level in a decade.
Some economists predict house prices could drop as much as 15 per cent from the beginning of 2010 to the end of next year.
A separate study by the CML suggested virtually everyone believes that Britain has housing problems, with young people unable to afford to step onto the property ladder and taking on too much debt to do so as the biggest issues.
Housing minister Grant Shapps said: “I have made clear that I will support the 1.4 million aspiring home owners whose ambitions are thwarted by a lack of mortgage availability. (AtW's comment: on ffs Shapps - the best way you can support those aspirations is to make sure house prices actually drop to become affordable)
“That’s why as a Government we're making efforts to tackle the record deficit we inherited, to ensure that interest rates remain low and to bring back a golden age of home ownership.”
Source: The golden era of home ownership is 'over', says mortgage boss - Telegraph
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