HBF warns of mortgage regulation

The Home Builders Federation (HBF) has today warned the Financial Services Authority and the Government that regulation of the mortgage market is not a solution to the threat of future house price inflation.

The HBF which has 300 members said that imposing prescriptive inflexible constraints on lenders that take no account of personal circumstances or risk cannot be used as a tool control the inflationary consequences of restrictions on land supply - the major risk to future housing supply and thus prices.

Speaking today at HBF's Policy Conference, executive chairman Stewart Baseley said:

"If the FSA and Government go down the route of mortgage control to try to head off future asset bubbles they are likely to entrench and worsen future housing under-supply that is rooted in the constraint of land supply.

"House price booms are caused by an imbalance between supply and demand and the long term solution to escalating prices is to ensure there are enough homes to meet demand - not to impose regulation that takes no account of personal circumstance or risk that could discriminate against people perfectly able to realise their ambitions of home ownership. We are cleaning the car window when the petrol tank has a hole in it."

The warning comes in advance of tomorrow's publication of Lord Turner's report in to the future of financial regulation.