Moneyextra.com comments on Turner report

Richard Mason, Managing Director at Moneyextra.com comments on the proposal in the Turner report to debate the future of regulation in the mortgage market.

"Over-regulation is never in the best interests of consumers and tends to stifle competition. Attempting to over-regulate the mortgage market now is simply a knee-jerk reaction that will further delay the recovery of the UK's housing market.

"Careless lending in an over-valued property market was the main factor driving the housing market crash; however I believe that lenders today have adopted a more prudent approach.

"I would hope the FSA works with lenders and challenges them to ensure they're operating responsibly, rather than dictate the terms. This will enable lenders to be more innovative in the creation of products to help those most in need - first time buyers.

"As is discussed in the report, first time buyers are vital to a buoyant property market and it's essential their lending needs are catered for. As the market recovers, loans at 90 per cent or even 100 per cent should be considered ‘safe' by lenders, as equity incrementally grows inline with rising property prices.

However, while caution should always be exercised when dishing out loans of up to 100 per cent, lenders should be allowed to stimulate the property market by defining their own lending criteria and setting their own LTV's.

"Our recent research on the UK property market revealed that over 5.2 million people are looking to buy their first property in the next six months, compared to the 675,000 homeowners who are looking to downsize. However, of the 1,579 mortgages currently available from prime lenders, almost 90 per cent require a deposit of 20 per cent or more.