Deep impact: how many good borrowers is regulation prepared to exclude?

The CML is today publishing a detailed analysis of the impact of the Financial Services Authority’s (FSA) proposals on responsible lending. We find that if the FSA’s proposals had been in effect from 2005, around 3.8 million “good” loans would potentially not have been granted. While fewer arrears and repossessions would have occurred, this effect would have been modest compared with the impact on large numbers of creditworthy borrowers.

Our analysis is backward-looking, and therefore does not attempt to quantify the effect on new business. The mortgage world has already changed significantly, and we would not expect the impact to be as high on new business as it would have been on past business. However, we believe that our analysis nevertheless demonstrates that the future effect on the market would be significantly higher than the FSA’s impact assessment has acknowledged to date.

Read the whole article here.
Article by the Council of Mortgage Lenders.
Data sourced from the CML/BankSearch Regulated Mortgage Survey.