The Intermediary Mortgage Lender’s Association, (IMLA) said this generation has also been let down by the destruction of the pension industry, will carry the costs of higher education and have less opportunities in employment.
“Inevitably a much more constrained housing and mortgage market would become a source of considerable discontent and social inequality. At some point those affected are likely to bite back, potentially in the form of political action and there is a risk that the industry will be forced into new forms of lending,” said IMLA’s executive director, Peter Williams.
In IMLA’s Mortgage Market Review (MMR) consultation contribution, it commended the regulator’s “measured” efforts to address industry concerns, however, the future health of the mortgage and housing market is still at risk, it said.
However, trouble spots remain including interest-only and the finer detail on affordability, said Peter Williams, IMLA executive director.
He said: “IMLA’s assessment is that the direction of policy, which appears to prioritise consumer protection over consumer choice, along with more demanding prudential regulation for financial institutions, will limit mortgage supply and mortgages that are available will be more expensive.
He said when you combine this with the current state of the economy you have a cocktail of ingredients acting as a cap on the ambitions of would-be homebuyers.
“Reflecting on the world we live in, there are already increasing numbers of non-standard borrowers and tighter restrictions are likely to fuel this even further. Buying a home at any point in their lives may not be a realistic option now for a higher proportion of “twenty-somethings” than has been the case since the Second World War.”
Williams said the FSA and the government must be clear on the consequences their actions will create.