Interest Only Mortgages May Disappear
Published / Last Updated on 07/09/2010
Interest Only Mortgages May Disappear
by Ashley Clark, Director
The Council of Mortgage Lenders has warned that the financial regulator, the Financial Services Authority (FSA), may kill off lenders offering interest only mortgages.
The FSA is currently conducting a Mortgage Marrket Review following issues with irresponsible lending policy in general causing the collapse of the financial system in 2008.
Currently both advisers and lenders are resonsible for ensuring that a borrower takes on a mortgage that is both suitable and affordable but the regulation of mortgages and mortgage brokers in general has note been as onerous as that on fully authorised financial advisers. This is set to change.
The CML has warned that yearly costs for checking lenders own staff competence plus independent brokers authorisation and then lenders also being held directly responsible for the failure of a mortgage repayment method e.g. if your endowment fails. In these circumstances, the lender may be held to acount and may mean the lenders pull out of the interest only market.
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