British Lending Standards Weakened
It has been said that the lending organizations in the US will give cash to anyone with a pulse. This report from TimesOnline reveals that a similar lowering of standards is occurring in the UK.
"Five years ago Halifax, the UK’s biggest mortgage lender, would grant an interest-only loan only after inspecting the policy documents of an endowment or other investment vehicle. Borrowers who were relying on rising house prices or an inheritance to pay off the loan would not have passed the application process. But Halifax changed its rules in 2000. Now the bank, in line with many other lenders, does not check any paperwork, but regularly reminds borrowers that it is their responsibility to set aside enough cash to repay their loan."
The article puts the source of the problem on this familiar trend. "Lenders say the increasingly competitive mortgage market has made it difficult to keep track of borrowers’ repayment vehicles as more homeowners move their loans between rival lenders to take advantage of the best deals." So where are the regulators?