SRB mortgage deals need "regulation"

Date:Thursday 1st October 2009
Author: Susanna Kavka

Although sale and rent back (SRB) mortgage deals can be a positive move, there needs to be regulation of the market, according to an industry insider.

Catherine Hearnden, director of MyMortgageDirect, made her comments following the news from the Financial Services Authority that it will begin setting out measures to ensure that vulnerable customers are not pressured into an SRB deal.

She pointed out this type of mortgage can allow people to stay in their homes when they can no longer afford their original mortgage deal, so she felt the concept itself is good.

But Ms Hearnden noted that extra protection for consumers is needed and regulation by the FSA or a consumer body would be appropriate.

"It needs regulation, because obviously there have been some horror stories for this about companies getting on the bandwagon and basically ripping people off," she explained.

SRB mortgage deals typically involve a person selling their home and renting it for a set period of time, but usually the amount they get for the property is less than its market value.