According to the apex market regulator, one rule will be activated immediately while the remaining set of regulations designed to check the affordability of mortgage products will come into effect on 26 April 2014.
FSA managing director and Financial Conduct Authority CEO-designate Martin Wheatley said that the new set of rules will assist both borrowers and lenders, alike and help them to get rid of any undue burden.
Following the subprime crisis, which led to injecting public money into sinking banks to keep them afloat, the market watch dog started the process of mortgage market review in 2009.
"At the heart of the new measures is an affordability test to check borrowers can meet the repayments of the mortgage they want," Wheatley added.
Before sanctioning home loans, the lender will have to assess the borrowers’ net income and calculate affordability, while considering basic essential expenditure.
All the customers will need to satisfy lenders that they can afford the mortgage, and provide evidence of their income, as per the proposed regulation.
