Whilst sharing the FSA's overall concerns about the impact of borrowers not having adequate repayment strategies, the BSA argues against the need for regulation in the area of interest only mortgages.
We strongly oppose any moves for lenders to take on responsibility for the ongoing checking and monitoring of repayment plans beyond the application stage. Such a step would be impractical, costly and sends the wrong message to consumers.
We believe interest only mortgages can, and do, serve many customer groups well, and over prescription and regulation in this area is likley to result in lenders withdrawing from this market.
We welcome steps to regulate non-deposit takers so that a more level playing field is created for the market, however the effect of any regulation should not be to serve as a disproportionate barrier to entry for new lenders.
The full response can be found via the link below:
BSA Response on Interest Only and non deposit taking lenders