Self-cert and fast-track were abused for too long
Share
STAR LETTER
Last week the Financial Services Authority revealed that it is putting an end to self-cert and fast-track mortgages by requiring lenders to verify borrowers’ income in all cases.
The fact is that for too long self-cert and fast-track allowed consumers to borrow more than they could afford and this has now come home to roost. Just imagine what the situation would be if we weren’t in such a benign interest rate period. The trouble is that a lot of consumers don’t remember double-digit interest rates. And another thing that has been forgotten is that lending more than borrowers can afford drives up property prices.
The market doesn’t rise in line with incomes, it rises in line with the amount people can borrow. Has nobody learnt anything from the 1990s?
The market does not rise in line with income, it rises in line with what consumers can borrow - has nobody learnt anything from the 1990s?
I know I am old school and anti-credit scoring but that’s because I’ve seen how flawed it is. It works in a rising market but in a period of stagnation it takes six months to catch up, and in a recession it can’t catch up at all because it’s based on historical data. That’s why human
intervention is required.
So stop moaning about the abolition of these products and applaud some common sense. Getting clients excessive loans is not in their best interests - the point of our job is to lend people what they can afford, not what they think they can afford.
Finally, you should acknowledge that some of your colleagues played a game with fast-track - it doesn’t take a lot of knowledge to manipulate the system. And as for going on about how badly hit the self-employed are, might I suggest that tax evasion is detrimental to all. The fact thatthese people stick cash in their back pockets to avoid paying tax is not to be applauded.
GREY-HAIRED UNDERWRITER
If you enjoyed this article, sign up here to receive daily email updates from Mortgage Strategy and Follow @mortgagestrat
