FSA publishes Mortgage Market Review

The Financial Services Authority (FSA) has published its Mortgage Market Review (MMR), indicating that tight lending conditions may finally ease up for first-time buyers and so-called ‘mortgage prisoners’.

The new rules on mortgage lending, which come into effect on 26 April 2014, herald a more ‘common sense’ approach to the mortgage market, according to the FSA, and amongst other changes, do not prevent higher loan to value mortgages being offered to struggling first-time buyers.

This is particularly crucial as according to the Yorkshire Building Society, first-time buyers take an average of eight years to gather the average deposit of 20%.

Lenders will be given the flexibility to decide what type of evidence of income to accept from self-employed workers, who have traditionally had to produce two or three years’ accounts as evidence, compared to a little as three months of pay slips/bank statements required by other applicants.

The new rules mean that customers with an impaired credit history will be eligible for a mortgage, as long as they are able to afford it.

Lenders will also be able to make exceptions to the responsible lending rules for customers who need to remortgage, sometimes known as ‘mortgage prisoners’. This will be on the provision that the outstanding amount to be repaid does not increase.

“These new rules will help create a more sustainable market that works well for everyone, whether they are a borrower or a lender,” said Martin Wheatley, managing director of the FSA and CEO-designate of the Financial Conduct Authority.

“We recognise that many lenders are now using a far more sensible set of lending criteria than before, but it is important that these common sense principles are hard-wired into the system to protect borrowers.

5 thoughts on “FSA publishes Mortgage Market Review

  1. It is a long time to April 2014 in terms of a market, plus the fact the proposals do not address the main problem with the housing market, which is that houses are way above the value they should be to make the market work. When houses drop to an affordable level the market will right itself.

  2. Having just read that new rules regarding mortgage lending will come into effect in April 2014, I cannot understand why this cannot be brought forward to 2013 considering the desperate property market situation we have NOW. Just another example of something which will benefit many people which we will have to wait so long for. It is not as though anyone is going to lose money over the delay and I really thought that the government genuinely wanted to get the mortgage and housing market moving quickly – silly me! Can anyone tell me why the new mortgage regulations are being delayed for so long?

  3. i thought this lending criteria would ease up in stead of self cert mortgages sounds like the high street lenders are doing it for you thats great news as individuals are being protected from the very system that put them into trouble in the first place not very business minded these lenders

  4. The current lending criteria is spot on. Its tieing in affordability with earnings…..as it always did until the recent years of boom and bust.
    House prices need to fall to match earnings especially in the first time buyers market.

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