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Page last updated at 09:38 GMT, Thursday, 25 October 2012 10:38 UK

Borrowers should be able to 'afford repayment'


The Financial Services Authority (FSA) says lenders will have to carry out more thorough checks on people's ability to keep up with repayments, and interest-only loans won't be given solely on the assumption of rising property prices.

The managing director of the FSA, Martin Wheatley, explained that the changes will be of benefit to those taking out mortgages.

"We don't want people to enter into an interest-only mortgage and find 20 years later, 25 years later, the only strategy is that they have to leave their home. "

He explained that the changes will mean that lenders will have to validate borrowers' incomes "so that they can assure themselves that the borrower can afford the repayments".

"It's not rocket science," he added.

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