The introduction of mortgage product regulation will harm consumer choice and could restrict access into the housing market, the Association of Mortgage Intermediaries (AMI) has warned.
The association has told the Financial Services Authority, which is expected to publish its Mortgage Market Review later this month, that the ultimate responsibility for lending decisions must rest with lenders themselves, and that affordability issues cannot be controlled by regulation
It also argues that long term affordability of a mortgage agreement is influenced by borrowers' behaviour and changing personal circumstances, rather than a raft of new rules and regulations.
"The regulatory structure needs to balance the need to protect customers from unaffordable debt with their desire to buy a home of their own," said Robert Sinclair, director of AMI.
The body is also insistent that mortgage intermediaries play a vital role in helping potential homeowners make a decision on what they can realistically afford and what type of product is appropriate. Such a service should be supported by the industry and the regulator, says the AMI.
"Product regulation risks strangling innovation and competition. Prescriptive loan-to-value controls will prevent vulnerable consumers from moving to more affordable mortgage deals when they seek to remortgage.
"Loan-to-income restrictions will penalise the careful consumer, not the frivolous borrower. There are sufficient existing regulatory tools in place to deal with such market issues. And niche products such as self certification, remain appropriate for some borrowers and should not be completely driven out of the market," said Mr. Sinclair.
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