Do mortgages really need more regulation?

By Ian Harris, chairman of the Norfolk branch of the NAEA and an agent with Watsons in Norwich.

RIMG0190Under proposals published yesterday by the regulator, banks and building societies will have to assess all mortgage applicants on the basis of their “free disposable income”, after tax, debt repayments, utility bills and other outgoings including “alcohol and tobacco”, “clothing and footwear” and the cost of eating out.

In my opinion, it is very difficult to ignore the distress of financial ruin and repossession of anyone’s home and I do not think anyone in any property-related business would see this as a good outcome. Most also recognise that excessive borrowing has contributed in some measure to the position that the market

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That said, the mortgage business is already very heavily regulated and anyone applying for a mortgage in the last 5 years will have found there are a bewildering number forms to be filled in and people’s ability to maintain the loan is (in my view sensibly) scrutinised. Lenders already require significant deposits, application fees and place limits on mortgages in proportion to the applicants income, so no more limitations, regulation and cost – PLEASE! “Self-cert” mortgages do cause some concern as the process is open to obvious abuse however, even here, there are those who are self employed or have an uneaven income pattern for whom there is a genuine need for a “self-certification” product.

Perhaps the FSA should be having a closer look at the mountain of unsecured debt and “blanket marketing” of these products to those who can ill afford it.

*Ian’s on 01603 619916.

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