This is interesting on the back of the news last week about Northern Rocks plans to provide 90% mortgages in some cases.
According to an article in the Telegraph at the weekend homebuyers could be required to have deposits of 15% before they can get a mortgage under a tightening of rules being considered by the City regulator.
And it seems likely that deposits will not be the only thing that comes under this kind of scrutiny. The amount you can borrow per multiple of your income is also coming under review.
The telegraph reminds us that Gordon Brown recently suggested that 100% mortgages should be banned altogether.
Lord Turner seems to think that a more important question is one of income multiples. In evidence to the Treasury Select Committee, Lord Turner said: “We can certainly see a strong argument for us getting more involved in product regulation than we have in the past.”
There are bound to be people that are frightened by this much government interference regardless of its focus. Melanie Bien of Savills Private Finance, the mortgage broker, was quick to make this point. “There is a danger in product regulation that politicians are interfering in areas they don’t understand.
Lets hope the government are smart enough to get this balancing act right.
