|
|
Proposals to 'cut excessive mortgage lending'
The Financial Services Authority (FSA) has called for the introduction of tough new measures aimed at cutting levels of mortgage lending to individuals who cannot afford to make the repayments.
Following a five-year review of the mortgage market in which it analysed the causes of arrears and repossessions, the financial watchdog has revealed that nearly half of households are left with no money remaining, or a financial shortfall, after paying their mortgage bill and allowing for monthly living costs.
Together with the introduction of new 'affordability tests' for all mortgages, the FSA is calling for individuals to be required to verify their income, following the discovery that around half of mortgage customers have not been asked to provide proof of their level of income when taking out a mortgage, over the course of the last three years.
Meanwhile, the share of interest-only mortgages is also the rise, despite the fact that many individuals have no definitive plan for repaying the capital loan in the future.
Lesley Titcomb of the FSA said, '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'.
The FSA is seeking responses to its proposals by 16 November. The proposals can be viewed in more detail on the FSA website: www.fsa.gov.uk.