The FSA’s proposal to introduce an approved persons regime has come under fire from the Council of Mortgage Lenders.

Whilst the CML supports the bid to stop rogue individuals operating in the contractor mortgage industry, it says the justification to impose the regime on lenders as well as intermediaries is unclear.

Their argument revolves around the differences between lenders and intermediaries and they do not believe that the FSA has recognised these.

According to the CML, lenders are already subjected to sufficient regulation and do not suffer from a lack of training or competence. They estimate that 14,500 employees from lenders could be captured by these proposals.

The CML wants the FSA to modify the proposals regarding the debt management of people with mortgage arrears.

One such area that is concerning them is the requirement to record telephone calls and keep the call for three years after the overdue debt has been cleared. They believe this to be an excessive time and could lead to lenders keeping recorded calls for several years.

There are also concerns that the wording of the new regulations is not clear, fair and transparent and that although contractor mortgage lenders will be required to make significant changes to their systems, consumers will not see a proportionate benefit.

Finally, the Council believes that the new regime will be very costly and could delay the housing market recovery.

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The Council of Mortgage Lenders revealed on Tuesday that mortgage lending increased by 12% in February.

A total of 35,000 mortgages were taken out during the month which is an increase of almost 50% on the same period last year.The number of completed mortgages for contractors rose broadly in line with this figure.

More than a third of these were first time buyer loans granted to people who could put down an average deposit of 25% of the property value. The average contractor mortgage was 3.1 times the household income. First time buyers also committed to repay their mortgage by an average 13.3% of their total household income. 22,600 loans were made to people moving home, an increase of 11%.

Interest rates are currently at an all time low and February saw no increase in the number of fixed rate contractor mortgages or tracker products sold. Remortgaging is also not as popular as in previous years although there was a 2% increase over January’s figure.

Despite the increases in mortgage lending, house prices dropped 0.1% between January and February. The average house price is now £204,359 which is an increase of 7.4% on February last year.

Countrywide estate agent believes that mortgage lending will increase in March as applications have risen by 112% since the same month last year. They say this is due to an increase on consumer confidence and a larger number of mortgage products.

Grainger, the Newcastle based housebuilder and landlord, reported a 42% increase in sales over the six month period to the end of March. During the period they bought property worth £43 million compared to £12 million for last year.

The CML expects the new stamp duty regulations to fuel the market over the coming months.

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