Mortgage lending to get even tighter

talkalot

If this report is correct the criteria for mortgage lending is going to get even tighter. Its a pity this was not done a few years ago.
http://news.bbc.co.uk/1/hi/business/8312900.stm

property.advert

Utter nonsense to think about quasi commercial mortgages lumped in with personal house buying. BTL with increased rates and different terms will only move to pure commercial mortgages and likely be outside this knee jerk reaction.

Income multiples are an outdated method of calculating affordability. Fixed or capped mortgages with purchasers showing that they are already paying or saving the prospective mortgage amount may well make a comeback.

opinions4u

New rules to make sure that mortgages are only given to people who can afford the repayments are due to be announced by the banking regulator on Monday.

There is a danger that a "one size fits all" approach to regulation will squeeze product innovation out of the market. That may not necessarily be a good thing and could ultimately lead to lenders having the same products at the same price all the time.

The Financial Services Authority will make banks liable for loans if they do not check customers can afford them.

Not necessarily a bad thing, but there is a danger that this could open up a whole new claims culture simply because an underwriter misunderstood a complex set of accounts.

It is expected to ban self-certified mortgages, in which customers do not have to prove their income.

Fine with that. But this shouldn't exclude people with non-standard income sources from access to mortgage finance.

City minister Lord Myners told the BBC that the measures were about "returning to responsible lending".

Is that like signing off responsible pension pots for Fred Goodwin?

But he added that there would not be specific limits placed on the amount banks would be allowed to lend relative to their income or to the value of the property.

Fine with that. Regulators need to be closer to the risk profile of individual lenders' mortgage books though.

Instead, it is a "limit that says that the bank must ensure that it is in the interests of the borrower to take out the loan", Lord Myners added.

How vague is that?

It is also likely to clamp-down on companies who push loans or credit cards on consumers without having been requested to do so.

Define push. Are they planning to ban direct mail? Is it wrong for a bank to promote a credit card to customers?

Prime Minister Gordon Brown said the "much tougher rules" would protect the public. "Never again should banks and credit card companies encourage you to borrow more than you can realistically afford to repay," he said in a webcast on the Downing Street website.

As the nation's biggest borrower of funds without the ability to repay I suppose he would blame the lender, wouldn't he!

Mark Hoban, shadow financial secretary to the Treasury, said the prime minister should have acted much sooner to tackle problems of excessive lending.
"These problems have emerged on his watch and it's a bit late now to start clamping down," he said.

Because nothing similar happened under a government of a previous colour of course!

Mortgagehelper

Agree with the above, I am sick and tired of numpties who have never worked in Financial Services coming up with bright ideas..they might as well shut up shop now.

The press inflamed the problems we saw 18mths ago and guess what, they'll do it all over again with this one.

The Daily Slash (your wrists) Mail will be having organisms (sic) over this one.

The mortgage lenders have already adjusted their lending patterns, so why bring in more regulation to give them a further excuse to tighten just as they were starting to lend again????

Madness. Gordon Brown wouldn't know prudence if it came up behind him and poked him in his good eye.