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Mortgage applicants to face tough questions

NEW RULES: More questions will be asked of those wanting to take out a mortgage (PA)

NEW MORTGAGE rules that will see applicants face tough questions about their lifestyle are set to come into force tomorrow (Apr 26).

The questions facing those trying to get on to the housing ladder or move from an existing mortgage include queries into how much people spend on socialising, eating out, cleaning products and parking, and whether they plan to start a family or have more children.

The City regulator, the Financial Conduct Authority (FCA), has introduced the new rules, known as the Mortgage Market Review, to ensure borrowers are issued with mortgages they can afford both now and in the future.

Brokers say the changes could lead to delays and rejections of applications.

The Council of Mortgage Lenders (CML) said the transition to the new rules would be smooth, despite it being the biggest change to the mortgage market for more than a decade.

And many lenders have already changed their systems so they comply with the new rules.

Martin Wheatley, the chief executive of the FCA, told the BBC: "The core principle is a very sensible one - lend to people what they can afford to repay."

He added: "We've come out of a period, particularly in 2008-09, when there was no attempt to verify people's ability to pay, and we've ended up with lots of payment problems, lots of people in mortgages that are problematic for them, and if we had a different interest rate environment we'd see a lot of foreclosures."

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