Angel Mas, president of Mortgage Insurance Europe, at Genworth Financial, said: “The CML’s research paints an interesting picture of what might have been if the Mortgage Market Review (MMR) proposals had been in place since 2005.
“The research concludes that more than half the new mortgages would not have been approved, which raises serious concerns about the impact that these measures could have on the mortgage market if they are introduced as planned in January 2011.
“As a specialist in high loan-to-value (LTV) risk, Genworth’s aim is to enable homeownership for those with lower deposits, specifically first-time buyers. Whilst the MMR does not explicitly recommend the use of LTV caps, this rather blunt measure continues to be mentioned as a means of controlling the market and reducing the likelihood of another “boom and bust” scenario.
"Although we strongly support regulatory actions that encourage responsible mortgage lending, this should not be to the detriment of households with good incomes and good employment prospects, but lacking the 20% capital typically needed for a deposit.
“As opposed to artificial controls, we advocate a range of measures to reactivate the economy – backed by a very robust framework for residential mortgage lending. Rather than reinvent from scratch, the emphasis should be placed upon existing international models, that would be quick to implement and could bring confidence back to all stakeholders.
“We are currently finalising an academic report into the barriers to home ownership, to be published this month, which outlines in detail the worsening situation of first time buyers since 2006. It concludes that without moves from regulators and lenders, the difficulties experienced by this group are only set to worsen.
"High LTV is here to stay – we must find a way to help future generations gain access to homeownership and create wealth in the longer term, not marginalise them."
