The article is normally paywalled but I prefixed 12ft.io/ to it, which worked for me. Google supposedly quit caching websites but old caches are still reachable with 12ft.io.
The UK’s GDPR might make it hard for banks to use people’s purchase data to derive their alcohol & tobacco habits, so apparently banks have to rely on interviews. Still, it would be foolish to rely on the GDPR. There are also stories of banks looking at spending data to deny mortgages, which I would guess is happening in a place without privacy safeguards like the US.
Homebuyers could be forced to provide detailed information about the amount of money they spend on alcohol each month to qualify for a new mortgage under a new clampdown on reckless lending.
In a sweeping review of the mortgage market published today, the Financial Services Authority (FSA) said lenders needed to be far more rigorous about their financial checks of potential borrowers.
It said lenders should delve deeper into homebuyers’ personal spending including the amount they spend on alcohol and tobacco.
Spending on shoes, clothes and childcare could also be assessed under a new, industry-wide “affordability test”.
At present, the FSA does not prescribe rules about assessing a consumers’ ability to repay a mortgage and practices vary from one lender to the next.
In its document, the City regulator said: “There is clearly a responsibility on all lenders to extend credit only where a consumer can afford it and, in our view, a robust assessment of both income and expenditure is key to ensuring affordable mortgages.
“We propose to require all lenders to assess the level of a consumer’s expenditure in determining the affordability of a mortgage product, to ensure that lending decisions are based on a consumer’s free disposable income.”
It conceded though that there were some flaws with its plan with consumers potentially underestimating their spend or “failing to incorporate past experiences into their budgeting”.
The new measures, which aim to stamp out risky lending that has been criticised for compounding the financial crisis and tipping hundreds of thousands of homebuyers into negative equity, also include a plan to ban self-certified mortgages, dubbed “liar’s loans”, and to stop lenders from exploiting consumers who have fallen behind on their mortgage payments.
It also proposed that the FSA should regulate mortgages for landlords for the first time.
Self-certification mortgages were aimed at self-employed people with irregular incomes. The mortgages, which did not require proof of income, accounted for one third of new loans in 2007.
Their proposed banning was first revealed in The Times last week.
But the FSA stopped short of ruling out “supersized mortgages” by introducing caps on loan-to-value, loan-to-income or debt-to-income multiples.
Such mortgages were typified by Northern Rock which, at the height of the housing boom, offered 125 per cent home loan deals.
Gordon Brown wrote in a newspaper article at the weekend that it was “critical we end reckless banking practices that have left so many people worried about their finances”.
Jon Pain, managing director of supervision at the FSA, said: “The mortgage market has seen extraordinary upheaval over the past 18 months and while it has worked well for the vast majority of borrowers, some have suffered great financial distress. We recognise that we need to bring about a step change in regulation.”
He said there had been a “mutual assumption by too many borrowers and lenders that the good times could not end.”
The new reforms, he said, would ensure firms “only lend to people who can afford to pay back the money”.
But mortgage experts questioned the ease of imposing some of the new measures and expressed concern about the possible impact on homebuyers.
Ray Boulger, mortgage expert at John Charcol, said the new affordability test could prove difficult to implement. “I think it will be very difficult in practice to go into too much detail,” he said.
Homebuyers, he said, often forget the detail of their spending. “They will remember the weekly shop but not the £3 they spend on a sandwich each day.”
Paul Broadhead, head of mortgage policy at the Building Societies Association, said he had “significant reservations about the possible unintended consequences of some of the ideas.”
He said: “We believe that home ownership is something that should be encouraged, and it is vital that lenders retain the flexibility to respond to the very individual financial circumstances of individual borrowers.”
He added that self-certification mortgages were suitable for a minority of people and that an outright ban was “not appropriate.”
The Council of Mortgage Lenders said it was “important that the principle of consumer responsibility is not lost in such a regulatory environment, as it is a basic tenet upon which transactions of all kinds between firms and consumers rely”.
The report said there was a “clear and non-controversial case” for banning self-certification mortgages, instead compelling lenders to insist that customers provide evidence of their income.
“Our analysis shows that self-cert borrowers take out larger loan amounts than borrowers with standard products and fall into arrears much more frequently. To address these issues we propose to require verification of income for all mortgage applications,” it said.
The loans have been vilified as a significant contributor to the banks’ toxic loans problem because some customers have lied about their income. Defaults on self-cert repayments have been at much higher rates than the industry average.
HBOS and Bradford & Bingley were among the biggest self-cert lenders. HBOS was sold to Lloyds TSB in a rescue deal in September last year and B&B collapsed and had to be partially nationalised.
The plan to bring mortgages for landlords into the FSA’s scope for the first time was necessary the regulator said because of the big part the industry had played in “fuelling property price appreciation”
The FSA said: “As well as being a general contributor, buy-to-let funding funding has particularly helped to inflate prices of certain property types and locations such as city centre apartments.
“The overall impact on house prices inevitably has implications for our interest in the sustainability of the mortgage market.”
The market for buy-to-let mortgages has grown rapidly. Gross advances grew from £3.1 billion in 1999 to £44.6 billion in 2007.
The paper has been put out for consultation until early next year with a “feedback statement” to be published in March.
Shit.. sounds about right.
Although the /water is hot enough/ scenario could be addressed mechanically: bigger water tank, lower heating element raised and the heat pump heating the bottom exclusively where it could /always/ add heat because it would never be hot enough at the bottom.
(edit) after some thought, it would superficially make sense to get a factory water heater (tank) and not tamper with it at all. Just have a PV-powered HP heat water before it enters the stock water heater (in a tank or coil). Thus there could be 2 heat pumps (but for economy the stock tank would just be a simple non-heat pump type thus 1 HP). I guess this is still a dead idea anyway if it’s true that a PV cannot simply directly connect to a compressor.