Plans by the Financial Services Authority (FSA) to introduce mortgage controls to reduce risky lending will add further pressure to the market. Reports from organisations such as the Council of Mortgage Lenders (CML), Right Move and, of course, the National Association of Estate Agents (NAEA), have all recorded drops in houses prices, and mortgage approvals as well as sales across August and September.

Despite the Land Registry painting a somewhat rosier picture after it announced an average house price rise of 0.3% on Wednesday, the overriding sentiment is that the demand for property (especially amongst first time buyers) is not being met by mortgage availability.

The NAEA has long fought for tighter regulation within the industry to protect buyers and sellers involved in the house buying process. But by implementing the severe regulations proposed by the FSA on mortgages, this will impose more pressure on the beleaguered property market.

The Coalition has been quick to impress upon us all that the era of ‘living beyond ones means’ is no more. And, therefore, there has been a push for deficit reduction and responsible lending on the part of the banks.

However, mortgage availability is critical in trying to avoid the property market from seizing up entirely. Furthermore, the FSA’s proposals come at a time when there have been calls from the general public for the banks to start lending, particularly now that they are making profits again.

Some might argue that the drop in the average number of registered house hunters we reported in August (falling 292 in July to 250 in August) represents a reduction in demand. This reduction in activity is typical market behaviour for this time of the year, although we have also noted that the difficulty in securing a mortgage is forcing many into rented accommodation.

There remains strong, underlying confidence in property and it is time that the government, and the FSA recognised this. While we recognise that responsible lending is an important part of the government’s strategy to avoid another financial crisis, we risk the chance of the market stalling again with the current strictures in place – let alone with further regulation.

Irresponsible lending does need to be addressed (and on the whole has been so) but the plans currently under consideration are, in my opinion, a step too far.


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