The FSA has given lender controls the thumbs up labelling them ‘adequate’ after a review of 15 self-cert lenders.
Unlike the BBC, the FSA drew a distinction between ‘genuine self-cert lending’ and fast-track lending, which led to the FSA’s far more conservative estimate that self-certification lending represented just 6 per cent of the market, against 30 per cent from the BBC.
The FSA admitted fast-track lending was a growth area, but said additional safeguards against credit fraud meant both self-certs and fast-track loans had fewer arrears than full-status loans.
Chris Cummings, director at the Association of Mortgage Intermediaries (AMI), said: “I was very pleased to see the FSA recognise the difference between self-cert and fast-track, which are two very different products. We can only hope the documentary will reflect this reality.”
The Council of Mortgage Lenders (CML) also, unsurprisingly, spoke out in support of self-cert products, saying they extended the benefits of homeownership to those formerly excluded from the market.
The CML cited a report from ratings agency, Fitch, which argued LTVs remained far lower for self-certs than full-status loans and there was ‘little evidence that self-cert loans has pushed up house price inflation,’ as the BBC suggested in its Mortgage Madness documentary in October.
Simon Jones, director at IFA, Savills Private Finance, also welcomed the news, He said: “There is a genuine need for self-cert lending, especially where borrowers have complex or multiple income streams and it is important that lenders are able to satisfy these requirements.”
