FSA announces mortgage reforms

The mortgage market is set to be subject to a number of new regulations, the Financial Services Authority (FSA) has declared.

A key element of the FSA proposals is an affordability check, which means lenders will have to make a more thorough examination of the ability of borrowers to meet their monthly repayments and face liability for the costs if they fail to do this.

The reforms will also see the end of self-certification mortgages and a ban on arrears charges when a borrower is already making repayments.

Managing director of supervision for the FSA Jon Pain said these new measures “will ensure that the mortgage market works better for consumers and that it is sustainable for firms”.

National Association of Estate Agents chief executive Peter Bolton King said there needed to be a “sensible interpretation of these guidelines” to make sure they work well, rather than providing banks and building societies with a disincentive to lend.

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