NEARLY four million homeowners would have been denied a mortgage between 2005 and 2009 under affordability proposals put forward by the Financial Services Authority (FSA), the Council of Mortgage Lenders (CML) said yesterday.
It said that amounted to over half of all loans during the period not being granted to potential borrowers, despite the fact most were coping with repayments.
The trade body also warned 730,000 first time buyers, equivalent to 95 per cent of all those trying to get onto the property ladder, would have been rejected by lenders as affordability criteria would have been too tight.
The CML said that while its analysis was backward looking it suggested the impact of the FSA proposals on the future mortgage market would be significantly higher than the regulator’s own assessment.
Moreover, some 80 per cent of impaired credit borrowers would have been denied a mortgage despite only 20 per cent of them experiencing difficulties in meeting repayments in 2009, the CML said.
But in a statement the FSA said its proposals were designed to “address the major failures that have occurred in the mortgage market”, and that its evidence showed “16 per cent of mortgage borrowers were already financially overstretched.”