The charity said its analysis of FSA data suggested that between 16,900 and 18,500 repossessions would not have occurred if the MMR proposals had been in force over the last five years, as borrowers would not have been able to access loans they could not afford.
In addition, £20m in arrears fees could have been avoided.
Shelter is calling on the government to support the FSA’s responsible lending proposals, saying they will not prevent most people getting a mortgage, but ensure the loan is affordable.
Campbell Robb, chief executive of Shelter, said: “This research shows just how much the mortgage market has failed to protect people, leading to thousands needlessly going through the nightmare of repossession.
“Reckless lending over the last few years, which saw some lenders giving out loans of more than 100% of the value of the property and up to seven times people’s salaries, helped to fuel the rise in arrears and repossessions, not to mention an unsustainable house price bubble.
“Yet, the banking industry still refuses to support the FSA’s proposals and make sure this reckless behaviour is never allowed to happen again.”
He added: “With tough times ahead, it is vital the government and lenders make a genuine commitment to sensible lending which will prevent any more needless repossessions in the future.”
