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.