THE FSA unveils tighter rules on mortgage lending

The Financial Services Authority(FSA) has unveiled major reforms of the mortgage market.The regulator proposed making all borrowers pass an “affordability test” before they can get a mortgage, which would check they had enough disposable income to support the loan.

There is also expected to be a ban on self-certified mortgages, where customers do not have to prove their income. Banks will also be made liable for loans if they do not check customers can afford them.

Talking on the Downing Street website, Gordon Brown said: "I believe lenders should have to carry out proper checks on incomes before agreeing home loans...And to protect homebuyers further, we need much tougher rules to make sure that high loan-to-value or high loan-to-income mortgages are offered only when the lender has done rigorous checks to ensure people can keep up repayments."

However, the Council of Mortgage Lenders has warned against bringing in heavy regulation at a difficult time for the industry and said companies have already corrected many of the problems of the past.