MMR: key recommendations

The latest Mortgage Market Review consultation paper contains the following FSA recommendations:

* Income will have to be verified in every mortgage application
* Lenders do not have to consider in detail what borrowers spend but cannot ignore unavoidable bills, such as heating and council tax
* Interest-only mortgages can still be offered as long as borrowers have a credible plan to repay the capital. But relying on hopes of rising property values is not enough
* Lenders will have to consider the impact of increases in interest rates in line with current market expectations
* Some applicants, such as those trying to consolidate debts with a mortgage, will have to get advice to ensure they understand the full implications and costs
* Existing borrowers will be unaffected and lenders will have the flexibility to provide new mortgages to some existing customers even where they do not meet the new affordability requirements.

The FSA is also calling for feedback on developing a specific approach for entrepreneurs who borrow against their home to fund their business.