The Building Societies Association has warned that borrowers will soon struggle to find favourable remortgage rates if the FSA takes a heavy handed approach in the current contractor mortgage market review.
Responding to the FSA’s review, the BSA said that any new regulations should be carefully considered by the FSA in light of the apparent failings in the mortgage market. Consultation on these proposals is expected to last until 25 April 2010.
BSA’s head of mortgage policy, Paul Broadhead, said the FSA should concentrate on known areas of failure as well as taking into consideration the cumulative effect that regulatory changes would have on the market as a whole.
Mr Broadhead warned that if the FSA decides to adopt a prescriptive approach, thousands of ordinarily ‘A grade’ customers will find it difficult to secure a competitive remortgage in the future. He also said that there was a risk that prospective borrowers will be deprived the chance of getting a mortgage in the first place.
He added that although the UK market for contractor mortgages is showing some glimmers of recovery, the FSA should consider the fragile state of the market before introducing more regulatory reform.
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