Speaking at the FSA's mortgage conference, Lord Turner said that the FSA's detailed analysis of the mortgage market was highlighting a very complex situation, in which the FSA had to take account of short term trends as well as designing the appropriate long-term policy.
He told the audience that careful thought had to be given to the relative merits of alternative policy instruments, and in particular the choice between product specific regulation, sales regulation and firm level regulation:
"So should the FSA end up recommending limits to LTV or LTI - the headline issue on which the debate about the future of the mortgage market sometimes focuses? I do not at present know and I make no apology for that lack of certainty. What I have tried to do today is to indicate that the issue is a complex one, which requires careful consideration and further empirical analysis, running up to the FSA September Discussion Paper, and indeed subsequently, in a wide ranging debate.
"We do not need to rush to decision. We do not face today, nor are we likely to face anytime soon, the danger of irrationally exuberant behaviour by either borrowers or lenders. We have time to get it right. And getting it right is very important given the huge importance of the mortgage and housing markets, to individual households, to banks, building societies and other credits intermediaries, and to the macro economy."
The FSA will publish its proposals for changes to mortgage regulation in a discussion paper in September.
