Will mortgage proposals freeze out borrowers?
Thursday, 7 October 2010 6:00 PM
Proposals by the Financial Services Authority (FSA) to reform the mortgage market could leave many potential borrowers in danger of being frozen out, according to What Mortgage.
In July, the FSA recommended imposing affordability tests for all mortgages and making lenders ultimately responsible for ensuring the borrower's ability to pay, as well as providing extra protection for vulnerable customers.
However, the Council of Mortgage Lenders (CML) responded this month that has these changes been in effect from 2005, around 3.8 million "good" house purchase loans may not have been granted.
Ben Wilkie, editor of What Mortgage, said the FSA needs to listen to industry voices like the CML and in any case, lenders already take steps to reduce their risk.
"Making a cut off for first-time buyers would ruin it for people who want to move house, people who want to remortgage, people who want to invest in property or people who want to downsize when they retire," he added.
