FSA reforms would have meant 4m fewer mortgages, lenders claim

[AtW]

But at least their lower profits would have been permanent and sustainable.

They would not have gotten big bonuses from that

[centurian]

Ok, here is how it works - if they lend half the money then they still got their costs and profit targets to hit, meaning higher %-tage paid by those who get the mortgage.

The disaster will be for those who thought house prices will raise forever.

They would have made less money during the "boom" years - after all that's why they wanted to keep ramming them down people's throats.

But at least their lower profits would have been permanent and sustainable.

[AtW]

They talk about it like it would have been a disaster - that's exactly how it should have been.

Ok, here is how it works - if they lend half the money then they still got their costs and profit targets to hit, meaning higher %-tage paid by those who get the mortgage.

The disaster will be for those who thought house prices will raise forever.

[centurian]

FSA reforms would have meant 4m fewer mortgages, lenders claim

They talk about it like it would have been a disaster - that's exactly how it should have been.

The banks over-extended themselves. They lent far too much without having the long term funding to cover it.

[AtW]

"The estimate by the CML is the most pessimistic to emerge since the FSA called for reforms to end excessive loans, impose more rigorous financial checks on applicants, and crack down on interest only mortgages to take some of the heat and abuses out of the housing market.

In a detailed analysis of the proposals, CML economists argue that FSA projections about the impact are too optimistic and believe that the new regulations would have an equally damaging effect on demand when the market experienced strong and weak periods, resulting in "an unintended obstacle to housing market recovery."

Michael Coogan, CML director-general, has already warned that the changes are "fundamentally flawed" and would result in lower lending by banks and building societies as well as creating "mortgage prisoners" among borrowers unable to remortgage or move home.

The CML says it is unable to make forward projections about the market impact but if the proposed new rules had been in effect from 2005 around 3.8m "good loans" could have been rejected.

While there would have been fewer arrears cases and repossessions the effect would have been modest compared with the impact on a large number of creditworthy borrowers.

The FSA in its impact analysis suggested that 16pc of borrowers who took out mortgages over the four-year period would have had their applications rejected on the grounds that they could not afford repayments. The CML does not dispute the estimate but maintains that if the impact of all the other proposals had been taken into account more than half of all loans would have been affected. "

More from the source: FSA reforms would have meant 4m fewer mortgages, lenders claim - Telegraph

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I'd better start looking for new house to rent ASAP!!!