NEW rules to clamp down on irresponsible mortgage lending risk shutting thousands of buyers out of the property market, it is claimed.
Housing minister Grant Shapps said lending reforms being put forward by City watchdog the Financial Services Authority must not be so severe that they worsen an already difficult situation for potential buyers.
Newspaper reports said Mr Shapps plans to use a meeting with FSA head Hector Sants next week to call on the regulator to rethink its proposals.
The new rules include tough checks on the income levels of mortgage applicants and whether they can afford to borrow.
Lenders will also have to make sure people with interest-only mortgages have a way of repaying their loan at the end of its term.
The Council of Mortgage Lenders has warned that about 45% of people taking out a mortgage during the past year would have been hit by the new measures if they had already been in force.
Mr Shapps claimed that under the rules, he would not be able to get a mortgage on his home, despite being a well-paid minister in his 40s.
He said he did not want to see banks return to their old ways of lending indiscriminately, but warned that it would be a mistake to “bolt the door” when the housing market correction had already taken place.
Banks and building societies tightened their lending criteria significantly in the wake of the credit crunch, with borrowers now needing deposits of 40% to qualify for the most competitive rates in many cases.
