Mortgage lenders in the UK have called on the Financial Service Authority (FSA) to alter their plans to restrict mortgage lending . The Council of Mortgage Lenders (CML) has warned that such a move by the financial regulator is flawed and impractical.
The FSA is introducing the changes in an attempt to curb irresponsible lending, arguing that borrowers should be protected from taking out expensive home loans that they cant afford, which leaves them exposed to having their house repossessed. The regulator first proposed that self-certified lending should be banned last year, and began consulting on a wider raft of plans in July this year, which is making the CML concerned that the move will affect any positive movement in mortgage lending in the future.
Michael Coogan, director general of the CML, commented that their research showed “a wide range of evidence that suggests there would be a range of negative, unintended outcomes from the implementation of the FSA’s policy and proposed rules as currently drafted.”
The FSA, on the other hand, have said mortgage lenders have been guilty of major failures, such as risky lending that contributed to unaffordable borrowing before the credit crisis . They have said that many borrowers are only able to remain financial viable because of the current extremely low interest rates .
The regulator said “it is imperative that we ensure lenders act responsibly and do not return to irresponsible practices, in order to protect consumers from taking on mortgages they cannot afford and potentially losing their homes .”
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