Lenders told to check borrowers’ income for all mortgages

Mmmmm, after the horse has bolted. This is common sense and if it had been (correctly) applied previously in my opinion we would not be in such a mess now. With artificially and unrealistically low interest rates, over valued property and shortage of finance (and no affordability), the housing market has a huge adjustment to make.

And whose going to check the checkers - I've always believed it was the lenders that got us in the mess in the first place. They got the bail-out, we didn't!

40 years ago these unverified income mortgages were a rarity, and you were restricted to around 2.25 to 2.75 times your income. You also got tax relief on your mortage interest which made a big difference in the early years of a mortgage. Arguably, once tax releif was removed, mortgages should have been reduced to about 2 times income to be as safe or affordable as they had been previously. We (builders buyers and banks/ building societies) have all been swept along in a great out-of -control housing bubble that is going to have a major correction.

Why not just base lending on what the borrower paid in tax the previous 2 years. Simple, easily verified. To benefit from the infrastructure of the UK you have to pay tax. No P60, no Loan from a bailed out bank.

It would end up steady tax payers would be getting a preferential rate on their loan, and anybody else would be paying the real cost.

Just follow the US system, prices have corrected properly there as borrowers can just hand back the keys. This'll ensure that lenders make more thorough checks and request suitable deposits.

Our system and pressure from the govt has kept the market artificially high, which is obviously unhealthy.

It beggars believe that organisations were lending hundreds of thousands of pounds without first checking the borrowers were likely to be able to make the payments,Good old Gordo and his FSA , What an incompetent he was.

This is insanity. Checking that people can afford to p[ay there mortgages. Do they not realise that this will cause the world to end and hapless bankrupts, fraudsters and dreamers will have no hope of owning some overvalued bit of bricks and mortar.

AND they are requiring people to save a deposit.

Words fail me.

How will the self employed ever get a mortgage

Produce their accounts like they always used to have to do. And if they "minimise" their earnings for tax purposes and can't then get a mortgage then that's just too bad.

And I say that as someone who is self-employed.

All sensible comments this morning.....a pity our politicians allowed the greedy lenders to screw us all.

I hope the house price fall can be managed over 10 years or we're all up the creek

I sense that most of the contributers, with the exception of Mr Furguson offer such opinion s becare perhaps sitting pretty for one reason or another and have forgotten the effort s of earlier years to get mortgages.

This proposal by the FSA really has not looked at all aspects of the mortgage industry and certainly not from the requirements of the range of prospective mortgagees in the population.

As usual, they have this blinkered look of all regulators, and I can give other examples if necessary.

They arrive at a supposed solution that encapsulates all they desire to keep their ship sailing along merrily without thinking through the multitude of circumstances that lenders are faced with and still able to "safely" lend.

By what I have read so far, their proposal will make it impossibile for any sel-employed person to get a mortgage. Even before this proposal it was hard enough, this pushed many to go down the non disclosure route and most were and still are able to continue their mortgage liabilities

Lenders must be able to retain their full discretional powers for lending. they know the warket and their potential clients best. A straight jacket dictatorial regime does not help.

Why do they think they know better.

Additionally, what happens to older clients that are reaching the end of a morgage term and would down-size, keeping a small mortgage whilst putting the excess by for future care. Thers seewms to be no room in the proposals for anything but a 25 yr mortgage so is therefore only aailavle for those with so many years in front of them.

Let the FSA mull over these vagaries with the lender and come up with a more practical scheme where the whole population can participate.

After a workinf lifetime in the Banking industry I sit here in astonishment that any lending institution can lend money to any Tom Dick or Harry without fundemental credit checks. The first principal of Banking is that you do not have any money only liabilities to your depositors. Secondly it is folly to lend money without security, unless you are VERY sure of your market place where collective assessment can be judged as prudent. There is no substitute for sound security in lending money, everything else is speculative capital with its just rewards if thre are any.

I have been arranging mortgages for 30 years. 20 yeras ago you could get 3.75 times income-when rates were 15%. Now therefore 5 or 6 times income is not the problem. I have not had one client get in problem with the mortgage. The problem is the credit card/loans/store card/car finance etc as well as Unemployment/ill health/divorce/loss of overtime. They cause the problem.

The meetings/paperwork for a clients mortgage takes 10 hours. The client can go and get the Credit card in 10 minutes. The wrong item is being regualted to death.

I worked for a company as an employee All basic salary. I had a new job lined up a few years ago, with very low basic and large bonuses. Arranged the new mortgage, and the day it completed I handed in my notice on the old job. What good was affordability checks now.

You mean they weren't before! I was putting my money into building societies and people were taking out self-certified mortgages for as much as they felt like so long as they had 15% deposit! No wonder the idiotic banks got into so much trouble.

Ha bloody ha, rearrange the words horse, stable, door, bolted, into a well known English saying....

Sack the lot I say and let the market sort itself out.

Thing is, little has really changed since the so-called credit crunch (how long did that really last?). The banks and building societies are still lending large amounts, this time using printed money from the BoE and their artificially low interest rates. They're also been encouraged to do so. The economy is really being run on the basis of debt rather than prudence, with those in masses of (avoidable) debt being rewarded and those with any savings being shafted. Little has changed since it all went temporarily pear-shaped in 2008. It being the longest recession since WWII only exists as a spurious statistic. It should have been true with the state Gormless Brown got us into, but so far policies have just papered over the cracks by printing money and keeping interest rates low to make it 'business as usual'. Further down the line, it probably will be genuinely awful...

Oh, I agree with Roger; the worst is yet to come....