Ian Crampton, director at Ferndown Ltd, has noted a tightening of restrictions by lenders’ on repayment vehicles via their online systems.
He explained that while he understood that restrictions have to be in place to avoid mis-selling, he still believed the area was a ‘grey one’ regarding FSA, lender and broker interpretation.
He said: “It seems to be a chain reaction at the moment. It’s difficult to know if the FSA is putting pressure on lenders or lenders are just being paranoid regarding interest-only mortgages and their repayment vehicles. But if the FSA is unsure and the lender is unsure, where does that leave us as the broker? I have become increasingly uncertain about what lenders will now accept.”
Bill Warren, director of The Complete Network, said: “The FSA does like to remind lenders that borrowers must have a repayment vehicle in place for interest-only mortgages.
“As far as I’m aware there’s been no change in its stance but maybe lenders are being pushed into tightening restrictions due to FSA interpretation or simply due to the market tightening.”
Robin Gordon-Walker, spokes-man at the FSA, said: “I can only assume that this is individual lenders taking this approach. There has been no new directive from the FSA on this matter.
“There is nothing wrong with interest-only mortgages for the borrower with the correct criteria. The onus is on the lender to lend responsibly and the broker to fulfil the lender’s criteria.”
