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Increased Protection For UK Mortgage Borrowers

by Jim ONeil on February 2, 2011

in Personal Finance Tips

The Treasury announced new regulations on Wednesday that mean good news for mortgage borrowers. The Financial Services Authority will assume second charge mortgage regulation from the Office of Fair Trading. First mortgages are already controlled by the FSA and by controlling second charge mortgages, the agency can make standards consistent and simplify regulation.

A second charge mortgage is taken out by a consumer who is deemed high risk. The money is frequently used to pay off debts. These mortgages are more costly than first charge mortgages and lenders act more quickly when borrowers fall behind in their payments. The government has also proposed regulating companies buying mortgage books from lenders originating loans, which should benefit borrowers.

The FSA will also be extending its current sale and rent back business regulation to all providers. This includes a person who purchases only one property and rents it to the former property owner to assist with financial problems. The change in oversight is designed to extend sale and rent back protections to individuals who formerly only had regular tenancy rights. These include a five-year rental agreement,

14-day cooling off period, and scheme risks and alternatives disclosure.

Social policy officers and Treasury Financial Secretary Mark Hoban applaud the government moves to increase protection offered to mortgage borrowers. With a single organization regulating first and second charge mortgages, lenders will take a more coordinated approach. They believe the regulations regarding sale and rent back and mortgage books address a regulatory gap, again offering consumers additional protection.

The FSA now faces the challenge of ensuring that regulations regarding second charge mortgages build on those of first charge loans. Regulations also must be compatible with safeguards included in the Consumer Credit Act. At the same time, the agency must insure that any regulatory proposals contribute to the desired results for consumers in the UK.


So easy – if interest rates rise too dramatically, how would it affect the economy in the UK?!

Look at the side effects of higher interest rates in each sector – housing, retail/consumption, agriculture, industry, investment, savings, international trade, employment, education, etc.

Does this makes sense to anyone here


With interest rates on some credit cards rising to over 23%, even low balance credit card debt can be crippling. Buyer beware for heavens sake

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