The Financial Services Authority has offered new life to potential home buyers. Thd once strict guidelines have now been lifted for a short time, as the FSA has decided against pushing through its Mortgage Market Review reforms. This is following an outcry from the FSA’s Consumer Panel, who believe a closer look at the consequences of the new reforms is necessary.

Backing down from the new changes means first time buyers, as well as those attempting to remortgage, will see less stringent guidelines when meeting with lenders.

The most recent FSA proposal includes using specific tests to measure the ability of the borrower to repay a mortgage.

The decision to ultimately approve or disapprove would be based on a series of issues. They include a measurement of the daily household budget and expenses. The test of affordability would use 25 years as the repayment time frame for all applicants.

The test for affordability also completely dismisses the possibility for the applicant to be able to cut down on discretionary spending, after they purchase a property or move up on the property ladder.

The three main buying divisions under the new rules would be first time buyers, interest only buyers and the self employedd. The Consumer Panel has also made it aware that those seeking a remortgage deal could be affected.

The chairman of the Consumer Panel, Adam Phillips, commented on the FSA’s consideration to evaluate the consequences more by saying: "We welcome the FSA’s decision to take more time in assessing the full impact of the MMR. It is essential that the regulator assess the possible unintended consequences and side-effects of its proposals for the rest of the market."