New FSA mortgage rules will cut supply by 50%!

A startling report comes in The Independent this morning, linked here, which spells out the obvious truth that if you make the provision of mortgages subject to sensible or prudent restraint you will necessarily reduce the supply. The Council of Mortgage Lenders have, however, been clearly startled to discover that half of the mortgages issued over the past five years would have failed the new affordability tests proposed by the FSA. They then go on to moan that some 3.8 million of such loans have continued to perform leaving only an estimated 200,000 at risk. The key to that statistic lies, of course, in the horrendous bank bail out figures and the following sentence later in the report, I quote: The report says much of the apparently good news resulted from an "11th-hour spending spree" by the previous Labour government. The present house price levels have only been maintained by the billions squandered on the banks and the disgusting spending spree by Brown and Darling as a last ditch attempt to further defer the moment when they must eventually be held to account. How many of those 3.8 million mortgages still 'working' will be still so doing in another five years of real austerity? Coalition politics again comes into play here, see my posting beneath this and its link.