New legislation aims to encourage responsible mortgage lending

13 July 2010

Written by David Whittaker

The Financial Services Authority (FSA) proposed today (July 13th) that changes to the way mortgage lenders are regulated should be made to ensure providers behave responsibly.

Research by the body found that 46 per cent of households were either left with a shortfall or with no money after making mortgage payments, once living costs had been deducted.

It also discovered that nearly half of all home loans approved between 2007 and the first three months of 2010 were authorised without the recipient being required to prove their income.

"There is a clear link between financial overstretch and mortgage arrears and repossessions and we are determined to protect vulnerable consumers by making sure that everyone who takes on a mortgage can afford to pay it back," Lesley Titcomb, FSA director responsible for the mortgage market, commented.

The Association of Mortgage Intermediaries welcomed measures to ensure borrowers can afford the products they take out, but cautioned that some of those seeking a home loan could be excluded by the proposed regulations.

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