On 19 October, the Financial Services Authority (FSA) set out proposals major reforms in the UK mortgage market to ensure that it works better for consumers and is sustainable for all market participants.
The review’s key features are:
•Imposing affordability tests for all mortgages and making lenders ultimately responsible for assessing a consumer’s ability to pay;
•Banning ‘self-cert’ mortgages through required verification of borrowers’ income;
•Banning the sale of products which contain certain ‘toxic combinations’ of characteristics that put borrowers at risk;
•Banning arrears charges when a borrower is already repaying and ensuring firms do not profit from people in arrears;
•Requiring all mortgage advisers to be personally accountable to the FSA;
•Calling for the FSA’s scope to cover buy-to-let and all lending secured on a home.
Are these proposals long overdue? Will they make it even tougher for first-time buyers to secure a mortgage?
Let us know what you think.
