Self-employed lenders moan about income testing
The Financial Services Authority has hit back at the "bigger" mortgage lenders for threatening to withdraw from the market over their incoming requirement to verify the income of self-employed people.
The FSA said some large lenders claim that having to assess the income of the self-employed and other borrowers with irregular earnings, as its officials propose, will be too "difficult."
So "they'd rather pull out than service the less straightforward" and "risky" consumer, the FSA's mortgage policy manager Lynda Blackwell said in a speech last week.
However the self-employed and those on an irregular wage are still able to prove their earnings, she told the Building Societies Association, although "it may take them a little bit longer."
"That doesn't mean they can't get one [a mortgage]," Ms Blackwell added, before dismissing claims that the FSA's proposals will create so-called 'mortgage prisoners.'
Addressing delegates directly, she said: "We are asking you to do nothing more than make a realistic assessment on the facts before you in each case. If verifying income makes you think the lending is risky, isn’t that worth knowing?"
The FSA reminded that affected parties have until November to respond to its consultation, which says the self-employed must prove their income and pass an 'affordability test' before they can take out a mortgage.