New FSA rules would hit 'creditworthy' borrowers

MORE than half of the mortgages advanced in the four years to 2009 would not have been granted under proposals being put forward by the City watchdog, it has been claimed.

Analysis published by the Council of Mortgage Lenders (CML) today shows that 3.87 million creditworthy borrowers given loans between mid-2005 and the first quarter of 2009 would have been rejected under affordability rules proposed by the Financial Services Authority (FSA). It said 51 per cent of all mortgages granted during the period would have been affected by the tighter loan criteria that lenders would have to adopt under the mortgage market review, with first-time buyers hit hardest.

The analysis comes after Michael Coogan, director general of the CML, claimed the review would cause house price falls and create mortgage prisoners unable to remortgage when their deals end. But the FSA said: "It is in the interests of all that we get this right: both lenders and borrowers suffer from irresponsible lending."