FSA cracks down on sub-prime mortgages

Sub prime mortgages are those that are offered to people with a poor financial history because they cannot get a mainstream mortgage deal.

These people include the self-employed or those with unusual requirements or those with bad credit histories. The Financial Services Authority (FSA) is currently cracking down on 200 firms who have been told to change or withdraw their misleading advertising which is designed to attract customers with poor financial histories.

The FSA believes that those in debt may feel despairing and then may be lured into unhelpful sub prime mortgage schemes by such ads.

Andrew Woodcock, from comparison website moneysupermarket.com, said: "There are people in some positions that need that type of mortgage and it is a way of getting those customers back onto the straight and narrow as far as mortgages are concerned."

He added that mortgage lenders should look into the individual reasons for people getting into arrears before automatically lending to them at a higher rate. Some people missed payments because of a bereavement, sudden redundancy or divorce rather than simply irresponsible spending.


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