According to the report in the Financial Times, the FSA is to pay “special attention” to banks and brokers lending to sub-prime borrowers.
Nigel Terrington, chief executive of Paragon Mortgages, explained to the FT that “investment banks and investors are looking for a yield” from such customers.
However, these consumers are already likely to suffer from a poor repayment history through credit card debt or other financial problems.
Due to this, the FSA is concerned that if the economy takes a downturn then customers could be hit with financial and credit problems, such as keeping up with mortgage repayments.
With the market worth as much as Â£30 billion, this accounts for a tenth of the mortgage market and thus would affect a large amount of people.