Banks ordered to relax mortgage rules

15 December 2011

UK banks have been instructed to relax their rules regarding mortgage applications as the housing market continues to struggle in the wake of the recession, it has been reported.

According to the Daily Mail, the Financial Services Authority (FSA) will unveil a raft of changes to the country's home loan system next week that all financiers will have to abide by.

The changes have been designed to help those people finding it tough to upgrade their home due to the current economic situation and are locked into negative equity on their present property.

These reforms have been created following a two-year consultation by the FSA - which operates under the Financial Services and Markets Act 2000 - that established alterations need to be made in light of recent financial problems.

Data from the Council of Mortgage Lenders has shown that some 827,000 homeowners are currently in negative equity - a figure the FSA hopes will decline after these rules have been implemented.

By Asim Shah

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