Caps 'could have been bad news for first-time buyers'

20-Oct-2009

New regulations announced by the Financial Services Authority (FSA) could have repercussions for first-time buyers.

In a discussion paper published this week, the body has called for stricter affordability criteria to be used by lenders, in which homebuyers will undergo questioning about their spending habits in order to determine their suitability for mortgages.

According to a report in the Times, this may include telling banks and building societies how much they spend on drink and trips to the theatre, among other information.

Furthermore, it called for a ban on loans to consumers who present "toxic combinations" of risks.

The news provider noted the FSA did not propose a cap on some riskier loans, such as those that saw some borrow as much as 125 per cent of a property's value.

Commenting, David Hollingworth, representative of London and County Mortgages, said: "Imposing caps could have been seen as bad news for the first-time buyer market."

Meanwhile, Steve Hilton, spokesperson for the National Landlords Association, recently claimed lack of affordable mortgages is preventing many first-time buyers from stepping onto the first rung of the property ladder.

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