New rules for loan sellers

Stephen Dinneen
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MORTGAGE sellers could face tough new rules under proposals by the Financial Services Authority (FSA).

The watchdog is calling for sellers to hold professional qualifications before they can approach potential home buyers.

The FSA has conducted a major review of the market as it seeks to protect buyers from being sold home loans they cannot afford.

Part of the review calls for new affordability rules which would require strict verification checks on customers that would take into account hikes in the rate of interest.

The FSA is also calling for clarity over firms selling only a restricted number of mortgage options, rather than loans from across the market.

But the Council for Mortgage Lenders (CML) says the rules could exclude creditworthy buyers from the market.

CML director general Michael Coogan said: “This set of proposals would end up doing more harm than good. We strongly urge both the FSA itself and relevant government ministers to take stock of all the evidence before proceeding.

“These rules would likely have the effect of creating significant financial exclusion among perfectly creditworthy borrowers. In turn, this has wider consequences for housing and wider society, and would exacerbate the generational wealth divide that already exists. We urgently need a proper public policy debate on how housing finance can help the government deliver its housing policy, and to review whether the risk-averse approach which the FSA has adopted would serve mortgage borrowers or undermine their reasonable aspirations to become home owners.”