Affordability rules will leave lenders relying on guesses
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The affordability calculations required by the FSA are laughable and leave lenders wide open to manipulation.
The trouble is that personal expenses must be an assumed sum unless we start asking for supermarket, petrol and clothing receipts. Anyway, the fact is that the world and his wife will be feeding themselves on 50p a day and not buying clothes, washing powder, soap or shampoo.
I also wonder how many people who are trading up will know what the Council Tax is on their new property - or the energy consumption or water rates. An affordability calculation therefore turns into a guess.
So that’s the bottom line - income will be a guess and how long will it be before some idiot comes up with a generic household cost for every borrower based on specious research?
We all know the market is cyclical and that in three years the regulators will settle back into their usual torpid state until the next crisis when they have to be seen to be doing something.
We also know that some active mind is already working on how to pander to the new-look FSA without taking it seriously.
It’s the ’don’t we look active - this will never happen again’ syndrome. But I’d lay odds on another mortgage market meltdown in the next 10 years because lessons are never properly learnt and some fool somewhere will relax criteria.
Sub-prime and self-cert lenders have been forced out of the market by their own poor practices but those that adopted traditional practices survive. Why try to kill them off by making a proven system defunct? The lunatics really have taken over the asylum.
Grey-haired underwriter
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