FSA looks to outlaw self certified mortgages
In a move which could hit the self employment market the Financial Services Authority (FSA) has today announced plans to effectively outlaw self certified mortgages. In a move which is aimed at reducing the risk of mortgage defaults in the future, and a potential repeat of the credit crunch, mortgage providers will need to obtain more information regarding a customer's financial situation before any mortgage arrangement can be agreed. So what impact will this have on the mortgage market?
Aside from the fact it is likely that self certified mortgages will be a thing of the past, even more straightforward mortgages could take longer to agree. This will extend the time taken to purchase property in the UK housing market and will not be beneficial to buyers or sellers. It is very difficult for the FSA to step forward and take such actions regarding the future because there needs to be liquidity in the mortgage market but there also needs to be a reduction in risk.
We will likely see more friction between the UK mortgage arena and FSA in the short to medium term but what else can the authorities do to reduce the risks going forward?
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