The broker trade body has responded to the FSA consultation on interest only mortgages today and the submissions from the CML, BSA and IMLA have AMI’s broad support.
Robert Sinclair, director at AMI, said: “Our credit crunch was driven by the closure of capital markets and the inappropriate risk assessment of securitised mortgages. It was the bad use of these mechanisms that led to the Bank bailouts. If the FSA conducted a proper root cause analysis it would have led them to that answer and, therefore, different solutions to those proposed."
"The regulators apparent aversion to a type of borrowing that has served many consumers very well appears predetermined rather than driven by rationale. When they are delivered on an advised basis and with a robust assessment of appropriateness for the customer, there is an appropriate place and use for interest only mortgages.
"This is not an affordability issue on day one or subsequently. It is the appropriate use of a funding route which, with appropriate risk assessment, should leave individuals no worse off. We must ensure we do not sacrifice a good choice for many on the altar of perfection and certainty.
"AMI will continue to campaign for brokers who act in consumers best interests to be allowed to advise on the widest range of solutions. Regulation should not make it so difficult that lenders see interest only as so risky that the capital required to cover this prices it out of the market.”
