FSA outlines proposals for new home loan rules

14 July 2010

The Financial Services Authority (FSA) has outlined proposals to ensure that borrowers can afford the home loan they are offered.

The FSA says the changes "aim to ensure all lenders get back to the basics of responsible lending and that problems are prevented before they can develop or get out of control".

Key proposals include:

• Applying affordability tests for all home loans, making lenders ultimately responsible for assessing the borrower`s ability to repay
• Requiring verification of borrowers` incomes in all cases
• Ensuring extra protection for vulnerable customers with a bad credit history

The new proposals come after an FSA review into the mortgage market found that mortgage payments were a source of financial difficulty for a large number of homeowners.

A loans expert at Think Money commented: "If they go ahead, the proposed changes could make a big difference to the number of borrowers getting into trouble with their mortgage."

Tags: FSA, Financial Services Authority, loans, home loans, mortgage, mortgage trouble

Fees payable when continuing service is provided. Repaying debt over a longer period may increase the total amount to be repaid. Calls are recorded and are usually free from UK landlines. Mobile phone users may be charged and should check with their service provider.