FSA tightens mortgage lending rules

Self-certified mortgages are to be banned and homebuyers applying for mortgages will have to undergo rigorous credit checks, under new rules unveiled by the UK’s financial regulator today. Hector Sants, chief executive of the Financial Services Authority (FSA), said the watchdog was seeking to ‘get rid of the irresponsible practices that put banks and consumers at risk.’ Lord Myners, the City minister, said the core of the problem was ‘irresponsible lending’ and stressed, ‘The FSA has some very strong sanctions and enforcement resources available if banks contravene the regulations.’ Setting out major reforms of the mortgage market, the FSA said this morning that it will make banks and other lenders liable for loans that cannot be repaid. It is forcing lenders to carry out thorough checks on people’s incomes before granting a mortgage, such as examining their spending habits and existing loans.