Liar loans set to be banned

THE Financial Services Authority will today unveil reforms to the mortgage market, including rules to ensure that they are only given to those who can keep up the repayments.<br /><br />Self-certified mortgages &ndash; where a borrower is not required to prove their income &ndash; are expected to be banned as part of the watchdog&rsquo;s review of how lenders behave.<br /><br />In addition the FSA will tell banks that they are liable for loans if they fail to make satisfactory checks on whether customers can afford them, which could include detailed checks on applicants&rsquo; spending habits.<br /><br />The review is part of Prime Minster Gordon Brown&rsquo;s pledge to end &ldquo;reckless lending&rdquo;. But the FSA will not place limits on the amount that banks can lend to borrowers in relation to the value of the property or their income. Brown said in a webcast that the new rules are designed to protect voters.<br /><br />&ldquo;Never again should banks and credit card companies encourage you to borrow more than you can realistically afford to repay,&rdquo; he vowed.<br /><br />But shadow financial secretary to the Treasury, Mark Hoban, said the clamp-down has come too late and was an &ldquo;attempt to deal with problems that have been allowed to emerge, unchecked&rdquo; for years.