Thursday, May 14, 2009
About a decade too late
A startling fact about mortgage lending was highlighted by the Financial Services Authority (FSA) this week. In 2007, at the height of the lending boom, 45% of all mortgages were being granted without the lenders checking if the borrower's stated income was correct. Many people will be surprised that lenders had got into the habit of lending billions of pounds to people without, apparently, making basic checks on their ability to repay. A lot of the unchecked lending involved "fast track" and "self-certified" mortgages. In some quarters these have been dubbed "liar loans", giving the borrowers a convenient way of dodging sensible lending restrictions. "We have found substantive evidence of irresponsible lending and inadequate affordability assessment," said the FSA.