In a news article on 3 January in The Observer Dr Cable revealed he had written to the FSA asking what steps had been taken to control the increase in self-certification mortgages.
Dr Cable had said he felt he had to take action following the ‘revelation’ from the CML that self-certification mortgages had made up 28.3 per cent of gross home loan advances at the end of 2003.
In the article he said: “I am extremely concerned about the increase in self-certification mortgages, especially as individuals are often tempted to overstate earnings to secure loans.”
However Matt Grayson, head of communications at HBOS-subsidiary BM Solutions, countered that it was not in lenders interests to lend money to people who could not pay it back.
He said: “We have a very flexible mortgage market in the UK reflecting the dynamic job market which has helped keep the UK economy competitive.”
He added that the FSA had investigated the self-cert market last year, following on from a BBC investigation (of which another one is currently underway), and had declared itself satisfied.
Rob Clifford, managing director of Mortgageforce, commented: “The employment tenure of millions of people is different to what it was five years ago, with many more people on fixed contracts.
“This precludes them from mortgages under normal underwriting criteria, making self-cert vital.”
