Ban on self-certification mortgages being considered by FSA

Date:Friday 15th May 2009
Author: Max Freedman

The Financial Services Authority (FSA) is considering a ban on self-certification mortgages.

Commenting on the issue, Jon Pain, retail markets managing director at the organisation, said that it may have made a mistake in not opting to tighten the rules governing such products.

He said that, at the height of the UK's property boom in 2007, nearly half of new mortgages were being granted without checks on earnings.

Around 45 per cent of all home loans provided during this period fell into this category, according to Mr Pain.

He added: "Many of the specialist lenders heavily marketed and sold self-certified products and a large percentage of these have led to correspondingly high levels of arrears and fraud."

The FSA, which was established under the Financial Services and Markets Act 2000, is now to consider whether the rules should be changed so that mortgage lenders have to insist on income verification for all home loans.