Charities call for curbs on lenders

Citizens Advice and Shelter said they supported the Financial Services Authority's proposals to introduce tough income and affordability checks on mortgage borrowers.

The planned new rules have caused controversy, with the Council of Mortgage Lenders warning that the regime would have an impact on 45 per cent of people who took out a mortgage this year.

But in a letter to Housing Minister Grant Shapps, the two charities said failing to permanently stamp out reckless lending would be a "missed opportunity" and a potentially "costly mistake".

The groups added that it was vital the Government did not allow a return to the soft-touch regulation of the past, which devastated the housing market and put thousands of homeowners on the brink of homelessness.

Meanwhile, the Building Societies Association called for the Government and housing industry to look at new ways of keeping people in their homes when they fell behind with their mortgage.

A report suggested that ongoing lender forbearance, and a more substantial Mortgage Rescue Scheme, under which people sell some or all of their home to a social landlord and rent it back again, could help to keep people in their homes.