London, England -- (SBWire) -- 04/11/2011 -- Instead of being an inoculation against measles mumps and rubella, the MMR this year stands for Mortgage Market Review, where the government (in the form of the Financial Services Authority) is taking a long, hard look at the mortgage system in the UK and deciding how it could be changed to prevent any future crises like the one we suffered in 2008, when the tax payer had to bail out Northern Rock and the Royal Bank of Scotland, among others.

The proposals so far would tighten up the criteria for banks to lend to home buyers, insisting that borrowers not only meet affordability standards at the time when they purchase a property, but that they will be able to afford payments well into the future.

There is a subjectivity to this reasoning: any of us may fall ill, may lose our jobs, or suffer some other financial problem which makes paying the mortgage harder. So the idea is that banks will have the freedom to prognosticate over how our lives will pan out in the future and make decisions as a result.

The proposed move has been attacked by groups such as the Council of Mortgage Lenders, which points out that, if the suggested measures had been in place between 2005 and 2010, 51 per cent of mortgages would not have been granted.

On the other hand, the charity Shelter claims that, if the measures had been in place, 17,000 repossessions could have been avoided, because people who could not afford mortgages would not have been given them.

The proposed changes run counter to the idea that banks ‘should lend more’, as the government keeps telling them. Here, it is saying that they should lend less to the ‘wrong’ sort of person. Mainly the sort of person who votes Labour.

Original comment can be found at The Mortgage Advisory