The Intermediary Mortgage Lenders Association has raised concern that a generation of twenty-somethings slammed by the failure of pensions, low employment opportunities, spiralling education costs and lower access to mortgage finance might “bite back”.
Peter Williams, executive director of IMLA, said: “Inevitably a much more constrained housing and mortgage market would become a source of considerable discontent and social inequality.
“At some point those affected are likely to bite back, potentially in the form of political action and there is a risk that the industry will be forced into new forms of lending.”
Williams said the MMR had come a long way since 2009 but that there “still remain some areas of contention, especially around interest-only routes and details of affordability”.
He said: “IMLA’s assessment is that the direction of policy, which appears to prioritise consumer protection over consumer choice, along with more demanding prudential regulation for financial institutions, will limit mortgage supply and mortgages that are available will be more expensive.
“Combine this with the current state of the economy and we have a cocktail of ingredients that is acting as a cap on the ambitions of would-be homebuyers.
“Reflecting on the world we live in, there are already increasing numbers of non-standard borrowers and tighter restrictions are likely to fuel this even further.
“Buying a home at any point in their lives may not be a realistic option now for a higher proportion of "twenty-somethings" than has been the case since the Second World War.”
Williams highlighted that this is also the generation that has been let down by the destruction of the pension industry, carries the costs of higher education and has fewer opportunities in employment.
And he added: “It is thus imperative at this stage that there is alignment between the Financial Services Authority and the Government and a full recognition of the likely impacts and consequences.
“If these are deemed as acceptable then it would be helpful to see this clearly stated so that the industry are not caught between different positions.”
IMLA submitted its comments on the MMR consultation to the FSA this week. Consultation closes on 30 March 2012.
