Clear guidance on mortgages is urgently needed says Vince Cable

7.01.00pm BST (GMT +0100) Mon 19th Oct 2009

Some borrowers and lenders have already decided that the housing market has bottomed out and are now piling back in and the Financial Services Authority (FSA) is planning to step up mortgage regulation. Commented Dr Vince Cable MP (Liberal Democrat Shadow Chancellor), "With unemployment rising and massive uncertainty in the economy this is a very dangerous game to play."

"There needs to be clear guidance on the affordability of mortgages. It is not in the national interest to pump more credit into the mortgage market. However, a distinction has to be made between existing mortgage holders struggling to renew who clearly need help and those chasing new mortgages with very high loan to value ratios, who do not.

"Better regulation of the mortgage market is welcome and it is right that self certification should be restricted, though abuse of self-certification is fraud and should always have been treated as such.

"With such a complex mortgage market already in existence highly prescriptive rules for mortgage affordability are not appropriate. It is critical that a simple and safe 'stakeholder' style mortgage as the Liberal Democrats have proposed is introduced."