Nearly 260,000 loans could be restricted

To alleviate repercussions from the recent recession and to prevent similar economic plight from occurring in the future, the Financial Services Authority (FSA) has come up with a new set of rules and regulations for loan market.

These rules and regulations have been drafted in the FSA’s Mortgage Market Review, which is going through a consultation stage  with loan market analysts at the moment, before the rules are put into force.

Ironically, despite the fact that these proposals have been devised to protect customers taking out a home owner loans and put an end to the issue of careless lending and borrowing, nearly half of the home owner loans that are being paid by Brits would not have been accepted if the new plans are implemented.

This scary projection has been announced by the Council of Mortgage Lenders (CML) who have calculated that about 260,000 home owner loans offered to customers over the course of 2005-2009 would have been rejected provided the proposed regulations of the Mortgage Market Review had been in effect at the time.

According to the Mortgage Market Review, the loan term should not exceed 25 years, which would prevent 13% of borrowers from getting their loan. Further, the FSA also proposed to ban interest only loans althogether, which would mean that 37% of borrowers would not have got their loan.

In turn, the FSA claims that at present borrowers are taking advantage of record low interest rates and house price inflation, which will not last forever.

This is the major reason why efficient and timely measures should be taken to protect vulnerable consumers and warrant responsible lending.

The FSA seems determined to go on working with industry to establish a dynamic mortgage market where consumers who can afford mortgages are given the possibility to get them. 



The cultural transformations that have made people accept life in debt have had a direct impact on the approach youngsters take to money matters, which could lead to negative consequences in the long run as many of the next generation would resort to IVAs to cope with serious financial issues.

When we put efforts into our work and get paid for this, we get an amazing feeling of satisfaction. Our hard hard work seems to have been remunerated financially. We go shopping and buy the items we need and the items we simply want.