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Mortgage lenders encouraged to lend responsibly
12 July 2010
The Financial Services Authority (FSA) intends to encourage responsible lending in the future, in an attempt to deter reckless borrowing from home owners.
During October last year, the FSA proposed that affordability tests should be introduced, so that lenders return to the basic principles of safe and responsible lending. The FSA also stated that mortgage customers should be required to prove their income, leading to the end of self-certification loans.
The aim of the FSA is to make sure that lenders only lent money to those who could afford it. FSA spokesperson Lesley Titcomb, commented: “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 it.”
She added: “We need to build a strong new framework to protect mortgage customers and to ensure that the problems we have seen in the past do not happen again, particularly as the mortgage market recovers.”
Source: Home Move
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