Financial Services Authority revises mortgage rules

Regulator seeks to avoid a return to risky loans.

The Financial Services Authority (FSA) is likely to impose new rules to prevent a resurgent in risky mortgage lending, according to revised proposals by the regulator.

The proposals, which are likely to be imposed in 2013, emphasise that lenders must judge properly the ability of individual borrowers to repay their loans.

The authority seeks to prevent a return to the high-risk lending seen in the early 2000s, when some lenders handed out mortgages with only cursory checks on borrowers' actual ability to repay.

Paul Smee, director general of the Council of Mortgage Lenders described the new version of the FSA's rules as"workable and appropriate", adding that they "seem to strike broadly the right balance."