Mortgage Introducer waited for opinion from within the industry on the contents of the report and what follows comes from Chris Cummings, Director General of AMI.
"We are disappointed that the interim report did not go further in its recommendations. We continue to call on the Treasury to look at the proposals that AMI, and other industry bodies, have provided to the Bank of England. What we need are measures to address the mortgage funding gap such as the industry's suggestion for a market-led solution to incentivise investors.
"We are rapidly approaching the first anniversary of the closure of the wholesale money markets and, with little new liquidity coming into the mortgage market, consumers will lose-out by paying higher mortgage rates, finding access to remortgage deals cut off. As the situation worsens, we will see arrears and repossessions increase. To deliver a stable mortgage market, it is now time for decisive leadership from the Treasury.
"Sir James' Report recognises the value of mortgage intermediaries as a force for good, championing the needs of consumers and bringing price competition to the market. Given the pressure firms are now under, he notes that there will be casualties on both the lender and intermediary sides of the market. Worryingly for consumers he flags that this may see the tide of competition and innovation roll back as consolidation occurs. This means a bad situation could get worse for borrowers."
Sir James' Report outlines a timetable for the rest of the year with a follow up Report presented for the Chancellor to consider ahead of the Pre Budget Report.
"We look forward to continuing to work with Sir James and his team on the next stages but urge haste in light of a rapidly deteriorating market."
Chris added:
"We are surprised the report states that there has not been any industry consensus. AMI, along with other industry representatives put our views forward in a joint open letter to the Treasury and Bank of England. We encouraged them to progress with the recommendations put forward by the CML and not to prolong the return to a properly functioning market. We are also keen to work with the Bank on its new liquidity facility.
"We are pleased to see that Sir James acknowledged the work of AMI in his recognition of a proposed Gold Standard for Mortgage Backed Securities. We put forward this proposal in our "Fixing The Crunch" white paper. We still believe that there is a lot of merit in this as it gives the market a point in stability from which it can reprice.
"We do agree with the report's recommendations not to implement a Freddie Mac or Fannie Mae style funding institution. It will take too long and cost too much money to establish such an institution and ultimately the cost will be borne by the consumer."
