She dismissed individual bans on loans above a certain “loan-to-value, loan-to-income or debt-to-income thresholds” as blunt tools. However, the regulator is ready to intervene on interest-only loans, which she said the market is already pulling back from.
Robert Sinclair, director of the Association of Mortgage Intermediaries. said the interest-only issue was likely to represent a real challenge to lenders and the FSA alike.
But Titcomb said: “We want to stop problems before they cause widespread problems for consumers.”
On buy-to-let, Titcomb said the market was being targeted because of the potential it offered lenders of getting around the “reform we bring to the rest of the market”.
She said the issue remained under consideration and that the FSA was doing the necessary preparatory work to be ready if the decision is made to regulate.
Meanwhile, battling the regulator’s attempt to crackdown on fast track and self-certification products, lenders continue to argue the case that some borrowers represent little risk.
Titcomb hit back: “During the boom, these cases became the norm, not the exception, with some lenders fast tracking first-time buyers on 95% LTV loans.”
The FSA denied that asking mortgage applicants for proof of income would bar anyone from the market who can afford to borrow.
“Opposition is mainly from large lenders, who argue the proposal may block access for some consumers such as the self-employed and will increase administrative costs,” she said.
However, the FSA has no plans to tell lenders how to assess applicants, only that they must, because the process is extremely complex, it said.
