IMLA raised concerns over the combined effects of the Mortgage Market Review, the Financial Policy Committee’s power to cap loan-to-values and debt-to-income levels, while it also raised concerns over the European Mortgage Credit Directive which comes into force in March 2016.
IMLA suggested that regulators perceive a normal mortgage market to be significantly smaller than pre-2007.
Peter Williams, executive director for IMLA, said: “No-one is questioning the need for continued caution or the regulators’ responsibilities to put boundaries in place to ensure the mortgage market is sustainable in the long-term.
“You could also argue that regulators and industry will naturally have differing views about what constitutes ‘normal’ or ‘healthy’ activity – and this is exactly why it’s in consumers’ interests to put a permanent forum in place where the two can put the vast tomes of new regulation under the microscope.
“We must ensure that future regulatory changes bring genuine benefits that warrant their costs, and do not weigh too heavily on consumer access. Every new set of rules takes us further into unchartered territory and heightens the risk of unintended consequences.
“Getting the right balance between safety, efficiency and choice is the biggest challenge facing the UK mortgage market and it will take a collective effort to hit the mark.”
IMLA acknowledged the ‘need’ and ‘inevitable cost’ of improving banking sector safety but warned against the ‘sheer volume’ of new rules.
The association also raised concerns over regulators’ so-called ‘bias to action’ – where don’t want to be seen as too accommodating to maintain their reputation. IMLA brought up the FPC’s June 2014 decision to impose interest rate stress tests and limit high loan-to-income mortgage lending as an example of ‘bias-to-action’.
