Fri, 17 Jan 2025

Mortgage rules could be eased to boost loans

The £100 limit on contactless cards could also be scrapped, as regulators respond to the prime minister's plea.
The UK's financial regulator, the Financial Conduct Authority (FCA), is considering relaxing strict rules on mortgage lending in an effort to boost economic growth. The FCA has launched an investigation into ways to simplify the rules that were introduced after the 2008 financial crisis to protect borrowers from reckless lending. This could make it easier for people to borrow money to buy a home, but some analysts and borrowers are concerned that this may lead to another financial crisis. The FCA will review the balance between protecting consumers and promoting economic growth, and is considering scrapping a £100 cap on contactless card transactions. This would allow lenders to offer more flexible borrowing options and could also make it easier for people to spend money. The decision to relax mortgage lending rules has been welcomed by lenders, but some experts are warning that this may not be the right approach. "We will begin simplifying responsible lending and advice rules for mortgages, supporting home ownership," said FCA chief executive Nikhil Rathi in a letter to regulators. Lenders have been restricted from lending too much money to borrowers due to strict rules put in place after the 2008 financial crisis. However, with low numbers of borrowers missing repayments or having homes repossessed, some experts are questioning whether these rules are too strict. The FCA will also consider other digital advances, such as requiring firms to accept electronic verification of death to speed up bereavement claims in insurance. The changes would need to go through reviews and consultation before being implemented.
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