I was sat the other day at a mortgage seminar, listening to a broker consultant trying to persuade me to encourage first time buyers to borrow too much and buy a property that is falling in value (nice free lunch though - I need all the freebies possible thanks to Gordon's credit crunch). As I dosed off during the presentation an old memory came to me of the regulator warning years ago of the danger of lending too much.
Back in the office and a bit of digging later I found this article
The FSA did not start regulating mortgages until November 2004, before that it was the Council of Mortgage Lenders.
Howard Davies (head of FSA in 2000) said regulators had found worrying signs that credit standards are reducing.
Credit standards loosened significantly when the FSA took over regulating.
upper range normal income multiples are moving from between 3 and 3.25 times prime income towards 3.5 to 3.75 times prime income
Multiples went to 6 times income when the FSA took over regulating.
Howard Davies said we look to lenders to retain good debt servicing capacity tests and prudent lending concentration risk limits
I have no idea what this 'Government worker speak' means, but I am guessing at 'Don't lend too much money to people who cannot afford to repay the debt'. Once the FSA took over the regulation of the mortgage industry, lenders stopped checking incomes on the majority of mortgages under 75% loan to value.
So to summarise
The mortgage industry regulated itself better than the FSA.
The FSA cannot regulate anything, says one thing and does another and then finds someone else to blame.
Gordon Brown has presided over this whole sorry affair for 11 years. In his opinion as long as it is not as bad as under the Tories it is OK.