Borrowers in the UK are to benefit from proposed revisions to the mortgage market by the Financial Services Authority (FSA), which will see affordability tests imposed on all mortgages to make lenders responsible for verifying an individual’s ability to pay.
The FSA’s managing director of supervision, Jon Pain, noted that it is important the organisation ensures firms lend only to those who are able to pay the money back, following analysis of the sector that revealed “the emergence of high risk lending strategies which typically focused on higher risk borrowers”.
“The mortgage market has seen extraordinary upheaval over the last 18 months,” he added, going on to say that although the majority of debtors have benefited, others have experienced financial distress.
Under the new regulations, self-cert mortages will also be prohibited.
Last month, Hannah-Mercedes Skenfield of moneysupermarket.com remarked that reductions in mortgage rates could soon be seen, if Libor falls below the Bank of England’s base rate.
By Sarah Adie