| Borrowers will face “invasive” inquiries into their spending and lifestyle under a crackdown on mortgages which begins next week.
Reforms to be introduced by the Financial Conduct Authority (FCA) will see people applying for a mortgage grilled on their weekly food bill, childcare arrangements and even the cost of their gym membership.
Until now it has only been necessary for applicants to provide three months’ worth of payslips and a handful of bank statements, but the new measures will toughen up the process in order to curb the type of irresponsible lending which contributed to the 2008 financial crisis.
There could also be an end to cheap, short-term “teaser” mortgages and a huge reduction in interest-only mortgages under the plans, which are likely to slow down growth in house prices.
People wanting to remortgage quickly could face a longer wait for their application to be processed, and house buyers could miss out on properties while waiting to be interviewed by the lender.
Interviews could last up to three hours, and applicants will not be successful unless they can convince the lender they will be able to afford the repayments, even in the event that interest rates rose sharply to seven per cent.
Martin Wheatley, chief executive of the FCA, told the Daily Mail the changes could suffer from teething problems, admitting the system would “probably not” be perfect to start with and there would be “some things we are going to have to think about again”.