Speaking at the Mortgage Expo in London today, the FSA’s Lynda Blackwell said: “Flight to quality is not the fault of the regulator. Tighter restrictions have arisen through market conditions not regulation.”
Blackwell stressed the Mortgage Market Review was not prescriptive or restrictive and it did not stop higher risk lending.
She added that some larger lenders may take a “commodity approach” to mortgage lending opting for a one size fits all mortgage range.
“Some lenders may choose to withdraw from higher risk lending because they don’t want to underwrite to the detail required but that’s a commercial decision and not prescribed by the MMR,” said Blackwell.
Earlier at the expo John Wriglesworth hit out at regulators collectively for restricting lending through over-reaction and “draconian” rules.
Blackwell confirmed that the FSA had considered policy objectives which would restrict loan to values by banning high risk combinations but, after discussions during the MMR consultation period, it was decided that these measures were too blunt and instead it would focus on affordability.
