FSA More to Ban Self Cert and Interest Only Mortgages
The FSA have made positive moves to ban certain types of mortgages in the UK, after consultation with lenders it has discovered some worrying statistics: almost half of UK home-owners with interest only mortgages had no money to off their mortgages and where relying on value rising to close the gap. Half of mortgages approved since 2007 were self certified with no proof of earnings.
Fair enough, they are seeing a problem but 3 years too late surely! Interest only mortgages are increasingly popular and outlawing them may be the final nail in the coffin of the property industry. They are popular for many reasons, with all the cash which the government has been spending on first time buyers as one of their single mother/new parents type causes do they really want to price another chunk of the mortgage market out of the game?
I agree that proving earnings will be a good thing, making lenders a little more accountable for their own failures is important but having an interest only mortgage myself it seems that they may be throwing the baby out with the dishwater. Further restrictions have been long in coming but with the market set to be back on track in 2011 is this the time to lose around a quarter of the mortgage market?
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