MORTGAGE bodies criticised the FSA’s plans to crack down on risky lending yesterday, as the regulator released full details of its paper on overhauling lending rules.
The Building Societies Association said planned curbs on interest-only mortgages risk punishing credit-worthy customers. “The FSA needs to proceed with caution so as not to restrict their use as a way to help borrowers overcome repayment difficulties,” said head of policy Paul Broadhead.
Hannah-Mercedes Skenfield from MoneySupermarket said:“It suits the FSA to position itself as a tough regulator now. The reality is that…lenders have learnt from the crunch and have tightened procedures considerably.”
FSA director Lesley Titcomb said the plans will “protect vulnerable customers by making sure everyone who takes on a mortgage can afford to pay it back”.
The FSA said yesterday the plan to impose affordability tests on all borrowers will cost
the industry between £5.8m and £20.3m a year, with a one-off implementation cost of £275,000 .
One in five borrowers in the last five years would have been hit if the plans were in effect, with 4.1 per cent barred from having a mortgage.