capitalfortune

Call us today to speak to an expert

0207 7 100 400

The ‘Common Sense’ rules of 2014

Back in October the FCA announced new mortgage lending rules to stop future reckless lending that happened during the last housing boom.

As part of this, there will be tighter checks on income and affordability, as well as applicants having to provide evidence that they have a plan for the repayment of their mortgages. The hope is that the new rules will reinforce the practical application of ‘common sense’ lending to avoid people having their houses repossessed.

One issue however is with regards to those wanting interest only mortgages. The new rules stipulate that people must offer a plan to repay their mortgage that does not just involve relying on rising house prices. As the FCA’s managing director said, it would be ‘irresponsible lending’ to let borrowers believe house prices will continue to go up and up.

While the rules will certainly act as a safe guard to avoid future risky lending, there is the issue of the economic climate. With relatively high unemployment, and the recent patch of graduates coming out with £20,000 of debt and most with little industry based work experience; getting a job is hard enough. Moreover, London house prices remain high; yet ironically seems to be where the majority of jobs are. As a result, while the new rules will help to stop more people getting into mortgage repayment issues, starting on the property ladder will be even harder for young, low income people living in London.

As featured

Newsnight
The Mail Online The Guardian
The Independent

Our customers have rated our service

Feefo logo

Awards from

Awards All
Awards All
Awards All
Awards All