City watchdog the Financial Services Authority is not yet ready to even begin the debate on regulation of the mortgage market, let alone offer recommendations, its chairman Adair Turner admitted today.

Speaking at the FSA’s mortgage conference, Lord Turner said that the FSA’s detailed analysis of the mortgage market was ‘highlighting a very complex situation, in which the FSA had to take account of short-term trends as well as designing the appropriate long-term policy’.

He told the audience that careful thought had to be given to the relative merits of alternative policy instruments, and in particular the choice between product specific regulation, sales regulation and firm-level regulation.

Turner said: ‘So should the FSA end up recommending limits to loan-to-value or loan-to-income – the headline issue on which the debate about the future of the mortgage market sometimes focuses? I do not at present know and I make no apology for that lack of certainty.

‘We are not yet ready to make even initial proposals for debate, let alone firm recommendations… We do not need to rush to decision. We do not face today, nor are we likely to face anytime soon, the danger of irrationally exuberant behaviour by either borrowers or lenders. We have time to get it right. And getting it right is very important given the huge importance of the mortgage and housing markets, to individual households, to banks, building societies and other credit intermediaries, and to the macro economy.’

The FSA will publish a discussion paper on mortgage regulation in September.

To read Turner’s speech see:http://www.fsa.gov.uk/pages/Library/Communication/Speeches/2009/0512_at.shtml