FSA “Puts Common Sense At The Heart Of Mortgage Lending”
The Financial Services Authority (FSA) has announced plans to introduce “common sense standards” to stop a resurgence in risky mortgage lending.
They want to prevent a recurrence of the irresponsible lending which resulted in some borrowers taking on mortgages which only seemed affordable on the assumption that house prices would always rise.
Many of those borrowers ended up struggling to repay their mortgage and in danger of losing their home.
The proposals, likely to be in place in 2013, should ensure that prospective borrowers get better information and advice and that mortgage lenders will properly check each applicant’s realistic ability to repay their mortgage.
As well as verifying an applicant’s income, lenders will have to consider unavoidable bills and the impact of increases in interest rates.
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