Will new mortgage rules ruin the party?
None other than the head of the Council of Mortgage Lenders (CML) in the UK has been in the press this morning attacking plans by the Bank of England and regulators to introduce restrictive guidelines for future mortgage arrangements. These tough guidelines are in effect new instructions from the regulator to the mortgage industry and will mean that more and more people will be unlikely to gain any mortgage funding for years to come.
As a consequence there is a growing belief among some economists that UK property prices will suffer if demand for mortgages goes unfulfilled with a doomsday scenario of UK property prices falling by up to 15% between the start of 2010 and the end of 2011. Whether this doomsday scenario is in fact nothing but scare mongering from some analysts and economists remains the to be seen but the truth is that if demand for properties is not there, for whatever reason, then prices will fall.
Whether or not it is too late to influence these new regulations, which have yet to come into place, remains to be seen but we have seen an increase in lobbying activity by the mortgage industry. There are serious implications if no amendments are made and mortgage funding is taken off the menu for many in the UK.
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