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FSA set to tighten UK mortgage lending rules

The FSA has over the last few days stepped into the limelight with regards to the future regulation of the UK mortgage industry. It seems inevitable that we will see a tightening of the regulatory framework which covers the mortgage industry and far stricter rules on the types and size of mortgages and loans which can be provided. So what exactly is going on?

While the wording of various comments and statements is fairly vague at the moment, Gordon Brown seems definitive in his view that 100% mortgages are a thing of the past and should be banned. There is an indication that homeowners will need to invest at least 15% as a deposit in any future property purchases with a further suggestion that income multiples may also be tightly governed by the FSA. There is no indication of the exact income multiples which could come into play but there is a suspicion that the authorities will look to err on the side of caution rather than place the banking industry at future risk.

It looks as though the landscape of the UK mortgage sector and house building industry may be set to change in the short to medium term although what impact this will have on the industry very much remains to be seen.

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