MMR: FSA relaxes rules to help mortgage prisoners
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Lenders will be allowed to waive affordability rules to rescue so-called mortgage prisoners, the Financial Services Authority.
In its final Mortgage Market Review consultation paper published today the regulator estimates half of borrowers are unable to remortgage or move house because of tighter lending criteria.
For first-time buyers it estimates it is even higher with 65% unable to remortagge leading the FSA is relaxing criteria as part of its MMR transitional arrangements.
It states: “Under our proposals, the transitional arrangements will enable a lender, whether the existing lender or another lender, to waive some of the proposed affordability rules, when entering into a new regulated mortgage contract, if the borrower meets certain conditions.
“However, the transitional arrangements will not compel the lender to lend, even where the borrower meets the relevant conditions. Whether to lend is a commercial decision for a lender to make. It is not our role, or within our remit as a regulator, to make lending decisions for the lender.”
It says the proposed affordability rules will apply when a lender enters into a new regulated mortgage contract, or makes a further advance, as is already the case with our existing responsible lending rules.
The FSA says one of its fears is that lenders could hike up rates knowing that borrowers are unable to move deals.
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Readers' comments (4)
Stuart Duncan | 19 Dec 2011 9:45 am
"It is not our role, or within our remit as a regulator, to make lending decisions for the lender". That is exactly what the MMR is all about - telling lenders under what circumstances a lender can lend. It is one thing to legislate - quite another to deny that you have.
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Anonymous | 19 Dec 2011 10:19 am
Spot on Stuart. This is the sort of nonsense that we have come to expect from the FSA.
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Anonymous | 19 Dec 2011 12:10 pm
So reading this, is that one rule for remortgages and one for purchases? Thanks for the clarification FSA.
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Anonymous | 19 Dec 2011 8:38 pm
Hmmm thats as clear as mud? so whats Happening?
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