Thursday 19th of March 2009
Proposals to limit the amount of finance available to those seeking mortgages have been criticised.
The Financial Services Authority noted that high loan-to-value offerings have been made available in the past, causing debt problems for consumers when values have not risen.
It recommended that restrictions be introduced, with the figure that can be borrowed based on a person’s income.
But Catherine Hearnden, director of MyMortgageDirect, suggested that this is the wrong approach for the current environment.
"It will stop the majority of people being able to either change a mortgage or move because, in theory, they won’t be able to afford the mortgage they have got," she said.
Ms Hearnden added that the measure was previously in place when interest rates were in double figures, but there is a "completely different" situation being seen now.
The FSA made the proposal following Council of Mortgage Lenders statistics showing that the number of repossessions reached 40,000 in 2008.
