This week sees the announcement of the new affordability rules set by the FSA.
After a long and in-depth review of the market the FSA has stated that all mortgage lenders, high-street and private, must review a full income and expenditure of every mortgage applicant, making the current affordability tests much tougher.
These new affordability criteria will certainly see the end of the self-certification mortgages or “liar loans” as it is known. A staggering 48% of mortgages approved between 2007 and 2010 were based on this type application and without that facility most of these applicants would have being turned down.
The Building Societies Association today warned that with these new regulations in place applicants worthy of the credit will be declined due to not being able to provide the full and correct set of documents strictly imposed by the FSA.
In addition to people not being able to get mortgages when they are proven worthy it will also cause “mortgage prisoners”, people who currently have or had a mortgage on their property and are now unable to re-mortgage due to these regulations, stopping them raising large amounts of funding in a manner that has become normal in the UK.
These new regulations are not the end for the FSA though as they are planning to review the interest only mortgages which so many first-time buyers rely upon.
With all this being introduced by the FSA, experts warn that it is going to create severe delays to the property purchasing chain that can already take up 6 months to complete.
Companies such as National Homebuyers can be a beacon of hope in these times for people looking to sell their property and do not have or cannot afford to have a sale completion taking 6 + Months.