Regulator says that it will also impose affordability tests for all mortgages
Britain’s financial regulator plans to force mortgage lenders to check the income of all borrowers, scrapping so-called ‘liar loans’ blamed for helping to fuel bad debt problems at the heart of the credit crunch.
 |
| Signs of change: Changes to mortgage regulation are a key plank of reforms which the government hopes will avoid a repeat of the unbridled boom in household debt in the run-up to the crisis. |
In the first draft of plans to overhaul the UK mortgage market, the Financial Services Authority (FSA) yesterday said that it would also impose affordability tests for all mortgages, but stopped short of capping loan value to property price ratios that could have effectively banned 100 or 125 per cent mortgages.
The initial findings of the long-awaited review – which reflects the increasingly hands-on approach of a regulator widely criticised in the aftermath of the credit crunch – also called for the FSA’s scope to extend to buy-to-let mortgages.
‘There are clearly certain types of loans which should not be made, and there are clearly some consumers who should not place themselves in a position where they wouldn’t be able to repay that mortgage in the future,’ FSA CEO Hector Sants said. Continue reading
Lush Dream Home 