A study outlining measures to reform the mortgage lending industry has 'erred on the side of draconian', according to the National Association of Estate Agents.
Restricting mortgage lending could severely hinder first-time buyers from accessing the property market, the National Association of Estate Agents (NAEA) has warned.
A report for the Institute for Public Policy Research by Professor Chris Hamnett of King's College claimed that the collapse of the housing market has been different to previous slumps because it "has been accompanied by, if not directly triggered by, the collapse or take over of de-mutualised mortgage lenders who had expanded far too rapidly during the preceding decade" through reckless mortgage lending practices.
Professor Hamnett suggested a number of measures to stop this situation arising again, including limiting house price-to-income ratios to around 3.5 times joint income and instating a maximum loan-to-value ratio of 95 percent. But NAEA chief executive Peter Bolton King claimed the proposals go too far.
"It is right and proper that irresponsible mortgage lending is discouraged," he said. "However there is no justification for sweeping measures that could prevent responsible first-time buyers accessing finance that will allow them to buy their own home. There is a balance to be maintained between responsible and draconian - and this report has erred on the side of draconian."
