RIP Self Cert Mortgages?

The Financial Services Authority have published an interesting Consultative Paper on the future of "Responsible Lending". This is part of the FSA's enhanced consumer protection strategy - and smacks of bolting the stable door after the horse has bolted. 


Comments are invited by 16th November 2010 on these proposed changes to Mortgage Regulation.

Some of the key proposals include:

• Imposing affordability tests for all mortgages and making lenders ultimately responsible for assessing a consumer's ability to pay;
• Requiring verification of borrowers' income in every case to prevent over inflation of income and to prevent mortgage fraud;
• Extra protection for vulnerable customers with a credit-impaired history.
• For Interest Only Mortgages - expect a further paper from the FSA but in essence requiring the borrower to have an appropriate repayment vehicle in place to repay the balance of the loan.

This will also impact on the Self-Employed and will require them to be able to evidence that they have adequate means to maintain and repay any loans.

Further information is available from the FSA website