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Millions Of Home Owners Face Restricted Lending

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Millions of home owners face restricted lending


Myra Butterworth, 10:34, Friday 5 November 2010
More than five million home owners will become mortgage prisoners or be forced to move to a cheaper area if new mortgage rules are introduced, lenders have warned.
The Council of Mortgage Lenders unveiled new figures yesterday suggesting tough new lending restrictions will lead to 2.2 million existing home owners being refused a new mortgage. These so-called mortgage prisoners would be trapped in their homes, unable to remortgage or move.
A further 3.4 million home owners would be able to obtain a new mortgage, but they would be offered less than the amount they would have been able to borrow previously, forcing them to move to a cheaper property.
The strict new rules on how much a person can borrow are expected to be introduced next year by the City regulator, the Financial Services Authority. They evolved after banks were accused of giving large loans to borrowers who could not afford them.
Under then FSAs proposals, the amount a person could borrow would be restricted by taking into account future rises in interest rates and whether they could afford their monthly payments based on a repayment mortgage rather than an interest-only deal.

I think they go to far when they want borrowers to show they can repay their debts if things change in the future.

Hrrrmph. :angry: *

* :lol:

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