What a match this is going to turn out to be. In the red corner you have the Council of Mortgage Lenders CML who provide the guidance for how lenders should behave.
In the blue corner you have the police of the finance industry called the FSA, The Financial Services Authority.
The FSA want regulation of buy to let mortgages the CML do not. Who will win? Place your bets! My money is on FSA.
I do not want regulation for buy to let mortgages even though we all would probably benefit for existing landlords. The reason I do not want regulation as it scares everyone away and slows everything down. Imagine a box full of water and then adding flour to it. That is what the mortgage market will become post regulation.
Currently the market flows fluidly. No one is worrying about compliance as there is no compliance. If I want to borrow at x% at y terms I can do.
The Regulation is like flour. As soon as you add it everything turns to SLUDGE. Everyone is looking over their shoulders wondering if they have complied or are they going to get a knock on the door by the FSA. So a loan that took 2 weeks to arrange will now take 2 months to arrange and then everyone starts to think – WHY BOTHER?
But we could be entering a new era where investment decisions have to take in to account regulation. Businesspersons need to be protected from themselves! I really hope we do not get to this point but I have to say I do not know what is happening in the world of finance so anything is possible.
So lets see how public this little battle between the CML and FSA gets. Are we going to see a clash of 2 egos here? I really hope not. I hope they can settle this like gentlemen and think of the people who it affects like me and YOU!
Ajay
Posted on: 17th Feb 2010
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