New rules to ensure mortgage lending is handled in a more responsible way have been introduced recently by the Financial Services Authority.  The lending sector in general is welcoming the new set of criteria.  Many experts in and around housing see the everyday borrower as a determining factor in the ability of the housing industry to forge a quicker recovery.  The Council of Mortgage Lending spoke to the new rules as being a more responsible means of lending into the future.  The lender is now shouldering more responsibility for making sure a borrower will have the ability to afford a mortgage along with its monthly payments.

Paul Smee, CML director, commented on the new rules, saying: “Today's rules bring certainty. Lenders can now make firm plans to ensure that they meet the new requirements when they formally come into place in April 2014. In practical terms, the regulatory changes have already been widely anticipated and so are unlikely to create any significant additional or unexpected impacts.”

Smee additionally stated: “We look forward to working towards implementation with the FSA and its successor, the FCA, and hope that from a supervisory perspective the regulator will focus just as much on helping lenders and brokers to meet regulatory expectations as on enforcement action if rules are broken.”

Although high loan to value type loans and interest only loans are necessary components of a diverse mortgage market, they will be highly scrutinized for their affordability in the years ahead.  More responsible lending will create a stable base on which a more efficient economy can rest.