New Regulations Over Lending To be Announced

This week will see announcements made by the UK’s financial regulator, the Financial Services Authority, with regards to mortgage lending. Regulations over lending are to be tightened up to make sure that lenders are only giving out loans to those that can afford to make the repayments on the money that they borrow.



The financial regulator has gone as far as to say that if lenders do dish out loans to people without checking with regards to whether the borrower can afford it the lender could be held liable for the loan. It is also thought that the regulator will place on ban on self certification loans, which are loans where the borrower is unable to prove their income in the usual way.



Lord Myners, the City Minister, said that the aim of the new regulations was to try and initiate a return to sensible lending following the financial meltdown that has been partly blamed on irresponsible lending by banks and financial institutions.



Myners did state that there would be no limits put into place with regards to how much the banks would be able to lend a borrower based on their income or the value of their home, but there would be a need for the banks to ensure that it was in the best interests of the borrower to take out a loan and then act accordingly.



Industry officials also expect the regulator to bring in new regulations with regards to companies that try and push finance onto consumers without request, and it is likely to come down hard on these companies. The new regulations are designed to give consumers further protection according to the Prime Minister, Gordon Brown, and he said that banks will never again be allowed to let consumers borrow more than they could realistically afford to repay.



Brown went on to state: "I believe lenders should have to carry out proper checks on incomes before agreeing Home loans. And to protect homebuyers further, we need much tougher rules to make sure that high loan-to-value or high loan-to-income mortgages are offered only when the lender has done rigorous checks to ensure people can keep up repayments."



Louise Ward has been a consolidation loans expert since 2001 and works for Loans4.co.uk, a company specialising in consolidation loans and homeowner loan solutions. Visit http://www.loans4.co.uk/ today for expert advice and consolidation loans.