Abstract
The recent experience of the credit crunch has cast doubt on the prudence of regulation of the mortgage market based upon the concepts of responsible lending and borrowing. Both the Turner Review and the Financial Services Authority's follow-up Mortgage Market Review identified irresponsible lending as one of the principle causes of the credit crunch. Yet easy access to mortgage finance has underpinned the growth of owner occupation and the promotion of low-cost home ownership. This paper examines recent regulatory initiatives to articulate responsible lending and borrowing in more concrete terms, which suggests a shift towards greater lender responsibility through affordability checks, clearer product explanation and the possibility of product regulation. Whilst such proposals may assist in the pursuit of a more stable mortgage market, they cast serious doubt on the future sustainability of low-cost home ownership.
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