Housing: Mortgages

Lord McFall of Alcluith Excerpts

Wednesday 10th November 2010 Lords Chamber

[Lord Sassoon]

My Lords, the level of new gross lending in the mortgage market is above levels seen throughout the 1990s, but, inevitably in this part of the economic cycle, it is low, as my noble friend said. Although loan-to-value thresholds are taken into account by the FSA for prudential purposes, they are not hard limits. The FSA says in its recent consultation paper that no case has been made for LTV caps on consumer protection grounds, and the FSA is not proposing to impose a maximum LTV cap. I note from just scanning mortgage products available on the internet this morning that there is still a range—admittedly a reduced range—of products with 80 per cent and 90 per cent LTV available.

[Lord McFall of Alcluith]

My Lords, will the Government keep in mind that the affordability criteria are important given that in the past three years more than 40 per cent of mortgages have been approved without proof of income? Will they accept that further checks and balances are needed in the mortgage market to protect consumers from mis-selling, and also to prevent another reckless housing boom?

[Lord Sassoon]

My Lords, I certainly agree with the noble Lord that questions of affordability should be addressed, which is why the FSA is carrying out the consultation. The consultation is due to close shortly and forms an important part of the FSA’s ongoing work to ensure a sustainable mortgage market for the medium term.

Housing: Shared Ownership

Lord McFall of Alcluith Excerpts

Monday 25th October 2010 Lords Chamber

[Lord Sassoon]

One of the beauties of the current system and our future system of financial regulation is that decisions about the relative riskiness of different classes of financial assets are emphatically not for government but for the financial regulator, which in due course will be the Bank of England. So while I can ask the Financial Services Authority to write to the noble Lord, I am certainly not going to second-guess its judgments.

[Lord McFall of Alcluith]

My Lords, are not all the building societies that became plcs now bust and out of business, and is there not a case for looking at mutualisation with responsibility? Surely the Government should be encouraging the FSA to go along those lines so that we have good mutual organisations, which have existed in the past, lending responsibly.

[Lord Sassoon]

My Lords, it is important that we have diversity and a variety of providers of financial services. In that context, building societies of course have an important role to play—particularly in the area of shared-ownership mortgages, which is the subject of the Question. Many building societies continue to offer products in this area, and I welcome that.