UK mortgage rules could be eased to increase growth
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FCA also aims to change law to try to prevent a repeat of mass compensation schemes for consumers such as PPI. Mortgage rules could be loosened by the City regulator as it comes under government pressure to increase economic growth and home ownership across the UK.
The move to “simplify responsible lending” for property purchases is part of a range of proposals put forward by the Financial Conduct Authority in a bid to prove that the watchdog is not standing in the way of the Labour cabinet’s “growth mission”.
The FCA also aims to change the law to try to prevent a repeat of expensive mass compensation schemes for consumers, such as the payment protection insurance (PPI) scandal. It follows complaints from investors and businesses over the potential costs of the car finance commission scandal, which could result in a combined £30bn bill for lenders such as Lloyds and Santander.
Regulators could look at how much first-time buyers are allowed to borrow and issue more loans to customers with smaller deposits, according to the Times which first reported the changes. At the moment, banks are only allowed to lend 15% of their total mortgage loan book to people who are borrowing at least 4.5 times their annual salary.
The Times, which first reported on the mortgage changes, suggested regulators could end up reviewing how much money first-time buyers are allowed to borrow and issue more loans to customers with smaller deposits. At the moment, banks are only allowed to lend 15% of their total mortgage loan book to people who are borrowing at least 4.5 times their annual salary.
