CML calls on FSA to re-think new mortgage guidelines

| November 5, 2010 | 0 Comments
CML calls on FSA to re-think new mortgage guidelines

A “mortgage famine” could be on the way, according to lenders and housebuilders, that’s if new proposals to prevent reckless borrowing are implemented.

The Financial Services Authority (FSA) has outlined plans to encourage responsible lending, which could mean even more buyers are locked out of the market.

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.

Consultation on the new rules ends shortly but lenders are urging the watchdog to re-think the proposals and is calling on the public to write to the FSA, local MPs and ministers to protest against the proposals.

In response, the FSA said it was merely trying to ensure that lenders only lent money to those who could afford it.

However, the Council of Mortgage Lenders (CML) fears that mortgage rationing would continue and these proposed new restrictions will not help people meet their aspirations to become homeowners.

Michael Coogan, the CML’s director general is suggesting that the FSA rewrite its draft rules.

Meanwhile, housebuilder Redrow has also attacked the proposals and fears for a “worsening mortgage famine” should the proposals go forward.

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