The Financial Services Authority (FSA) has announced new rules for the mortgage market in the UK.
It is hoped that the regulations will result in more common sense being used in the sector to ensure borrowers do not find themselves with a home loan they are unable to pay back.
The developments have come about following the FSA’s Mortgage Market Review and are set to come into play on April 26th 2014.
Martin Wheatley, managing director of the FSA – who will become chief executive officer of the Financial Conduct Authority when it is introduced next year – said the new guidelines should help with the creation of a market that caters to both buyers and sellers, while becoming more sustainable.
Mr Wheatley stated: “Many lenders are now using a far more sensible set of lending criteria than before, but it is important that these common sense principles are hard-wired into the system.”
Borrowers can therefore be confident there will be no repeat of the poor practices previously seen in the industry, while an affordability test will make sure people are able to pay back what they owe.
