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September 22, 2010    

CML warns regulator of mortgage lending restriction proposals

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by Kay Murchie
CML warns regulator of mortgage lending restriction proposals

The Council of Mortgage Lenders (CML) has warned that proposals by the Financial Services Authority (FSA), to encourage responsible lending, will cause house price falls.

The City Watchdog has previously announced plans to restrict mortgage lending, in a bid to prevent reckless borrowing.

The FSA has already proposed affordability tests for all mortgages to ensure that lenders get “back to the basics of responsible lending”.

It also wants mortgage customers to verify their income and this could see the end of self-certification loans - where no proof of income is required.

The watchdog said its Mortgage Market Review wants to ensure that lenders only lent money to those who could afford it.

The CML has described it as a well-meaning but misguided proposal and it believes more people will lose out on home ownership, as a result.

The CML argues that if house prices slump again, mortgage rationing would continue and these proposed new restrictions will not help people meet their aspirations to become homeowners.

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Tags: affordability tests, , , , , , , , , Mortgage Market Review, , responsible lending, restrictions


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