4
Jan
New mortgage rules......
New rules to stop a resurgence in risky mortgage lending are
likely to be imposed in 2013 by the Financial Services Authority
(FSA).
The regulator's revised proposals still intend to bring in "common
sense" standards that will stop home buyers borrowing more than
they can afford.
Lenders are being told they must assess the affordability of loans
better.
But some flexibility is being allowed for existing customers who
might have been prevented from remortgaging.
Lord Turner, chairman of the FSA, said: "While the excesses of the
pre-crisis period have largely disappeared from the current market,
it is important to ensure that better practice endures in future
when memories of the crisis recede and the dangers of poor practice
return."
The regulator wants to stop any possibility of a return to the
early years of the past decade, in which some lenders handed out
mortgages with only cursory checks on borrowers' real ability to
repay.
The most notorious examples were the "Together" mortgages offered
by the Northern Rock bank, which granted loans worth 125% of the
value of homes.
In some other extreme cases, lenders offered mortgages worth seven
times a borrower's income, or allowed them to exaggerate their real
income, especially in the case of "self-certified" mortgages.
The thrust of the FSA’s proposals, which are now going out to
a further round of public consultation, is still that lenders must
judge properly the ability of individual borrowers to repay.
"The proposals will see prospective borrowers - whether they are
first-time buyers, right-to-buy tenants or home movers - get the
right information and advice, at the right time, and ensure
mortgage lenders will be properly checking each applicant's
realistic ability to repay their mortgage," the FSA said
www.fsa.gov.uk