Submitted on Tuesday 12th May 2009
End of self cert?
As predicted in Mortgage Strategy by our company two years ago it looks like self cert mortgages are coming to an end. The FSA announced today that they are considering this because they consider it has increased the number of repossessions that are likely to occur. We personally do not like self cert as it is a botch job.
We think that below certain loan to values asset based borrowing should be allowed because if the client has enough equity then they can always sell themselves out of trouble. Beyond that lenders should be open to intelligent persuasion. Trouble is that most lenders do not have many decent underwriters and instead rely on credit scoring. This could mean that a person earning £30k a year who has £500k in the bank may be restricted to taking out a £100k mortgage even though they may have lodgers and there is no chance of them being repossesd even in a bad market.
We hope there will be a return to non prescriptive intelligent underwriting that we had ten years ago where the broker can add real value to cases that do not fit the norm.
