FSA outline mortgage rules

by Aaron Strutt

Oct 26 2012

The Financial Services Authority (FSA) has published their Mortgage Market Review (MMR) findings and they are not as bad as first feared. The new rules will come into effect on 26 April 2014. One of the main changes has been designed to help existing bank and building society customers unable to move property, or remortgage because of a lack of income or equity. To help these borrowers the FSA says that lenders will be able to 'switch off' mortgage affordability and interest only rules, providing they have a good repayment history. Another new rule will require more mortgage lenders to give advice when customers approach them directly. The regulator wants to reduce the amount of borrowers choosing the wrong rate or mortgages they can't afford. However, high net worth borrowers will be able to opt out of advice providing they have an annual net income of £300,000, or minimum net assets of £3 million.

Martin Wheatley, managing director of the FSA and CEO-designate of the Financial Conduct Authority (FCA), said: "To ensure the measures are effective but practical we spent a great deal of time discussing our proposals with consumers, firms, parliamentarians and numerous other stakeholders. I am therefore very confident that we have come up with a set of rules that are proportionate and sensible."

October 26, 2012