Lenders want FSA to review mortgage proposals
November 13, 2010
It was recently announced that the UK’s financial regulator, The Financial Services Authority, was looking to make some big changes to the mortgage lending market, having put forward a range of proposals that included wiping out self certified mortgages, putting into place minimum deposit levels for lenders, and increasing the checks that lenders would have to carry about before approving any mortgage loan.
However, the proposals have raised concerns amongst mortgage lenders, many of which have said that the FSA plans will make it impossible for some people to get a mortgage, and could see the mortgage and property sectors taking a real knock. Mortgage lenders are now calling on the FSA to review the proposals with a view to watering them down.
The Council of Mortgage Lenders has said that the plans of the FSA are flawed and are not practical, but according to the FSA the plans are aimed at reducing irresponsible lending. The regulator said that it was important that borrowers were protected from irresponsible lending by ensuring that they were not given mortgage loans that they could not afford to repay, which could otherwise result in them quickly losing their homes through repossession.
The proposals were first put forward by the FSA in October of last year, and its plans have been evolving since then. However, since that time there has been an ongoing battle between the FSA and the mortgage lending industry, which is strongly opposed to some areas of the proposals.
The FSA has argued: “Almost half of UK households (46%) have had little or no money left after their mortgage and other bills were deducted from their income. Even a modest rise in interest rates could lead to a significant increase in the number of families suffering financial distress. This is why it is imperative that we ensure lenders act responsibly and do not return to irresponsible practices, in order to protect consumers from taking on mortgages they cannot afford and potentially losing their homes.”
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