Plans to end 'reckless' mortgage lending

Tough new checks by banks and other lenders to make sure customers can repay a mortgage have been unveiled by the UK's financial regulator. The Financial Services Authority (FSA) will, from now on, force lenders to look much more closely at the ability of people to make repayments, such as checking spending habits and existing loan commitments. The Authority is also calling for a ban on mortgages containing "toxic combinations" which put borrowers at a higher risk, such as lending a high proportion of a property's value to people with impaired credit histories. Other measures being proposed include bringing buy-to-let mortgages and all other lending secured on a home within the FSA's regulatory scope. At the weekend Gordon Brown pledged to end "reckless" banking practices, saying that "much tougher rules" would protect voters.

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ITN | October 19, 2009

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