Peter Williams, IMLA’s executive director, said: “The FSA's new rules include a lot of good sense though much of it is already standard practice among lenders. There is a lot to absorb in this new document (it is over 300 pages long!) and IMLA members will want to take time to reflect upon it.
“It is not a consultation as some had hoped - these are the rules and we note the FSA will conduct a formal review of their impact within the next 5 years.
“We welcome the publication of the new rules because it largely brings an end to the process that has been underway since 2009. As intermediary lenders we recognise the importance of advice and in the new regime most borrowers will be required to take advice, this will no doubt improve outcomes for the majority of consumers.
“The FSA has had to deal with the problem of existing borrowers trapped in mortgages taken out under the old regime still having access to the market under the new rules and it has sought to make its 'transitional' rules more flexible in this respect.
“While IMLA recognises the efforts the regulator has gone to in order to help such customers, there are concerns that lenders may not be able to bring solutions forward unless there is the prospect of being able to price adequately for the risk.
“It is also clear that higher LTV loans to first-time buyers have not been banned and nor have interest only loans, with the critical focus rightly remaining on affordability. Both are sensible components of a modern and diverse mortgage market.
“The FSA has made adjustments in the light of industry feedback and our initial view is that its new rules will not damage the market but that they will also do little to reinvigorate a housing market that remains at a low ebb (beyond the clarity it offers).
“Given the UK needs to see sustained economic growth and within that a growing and competitive mortgage market it is hard to see these rules bringing new vitality to the market.”
