The CML has claimed that if the FSA’s responsible lending proposals had been in place since 2005, around 3.8 million ‘good’ loans would potentially not have been granted.

Following a detailed study, the CML has concluded that while fewer arrears and repossessions would have occurred, this effect would have been modest compared with the impact on large numbers of creditworthy borrowers.

The CML claims that only 5% of first-time buyers that would have been affected had any recorded payment problems. In effect, this means that around 730,000 first-time buyers over the period between the second quarter of 2005 and the first quarter of 2009 – 95% of the first-time buyers who would have been denied their mortgage under the rules as proposed – experienced no payment difficulties, it claims.

Borrowers with impaired credit would also have been more affected than other borrowers, the CML says, but at least with greater justification on the basis of subsequent loan performance. While 80% of impaired credit borrowers might not have been able to get their mortgage under the FSA’s proposals, some 20% of these loans were in payment difficulties in 2009.

In response, the FSA said: “Our proposals are designed to address the major failures that have occurred in the mortgage market and we are actively consulting with all stakeholders to ensure we get the right solution.