Concerns over new mortgage rules

THE new regime governing mortgages has created chaos and is likely to subject customers to delays, extra costs and worse deals than before, according to industry sources.

The Financial Services Authority this week took over the regulation of mortgage lending and advice. It claims its new rules will benefit the 2.75m consumers who take out a home loan each year.

Critics say it has plunged the market into disarray. Rob Clifford of broker Mortgageforce said: 'It is a sledgehammer. We have moved from a 14-page voluntary regime under the Mortgage Code to 1,000 pages from the FSA.'

Lenders and insurers have spent millions preparing for the regime and are expected to try to pass on the costs to customers through extra fees of up to £100 a loan.

Some providers, including Abbey, have temporarily pulled some products because of the complex changeover.

Brokers, who account for between 50% and 60% of all mortgage sales, complain of delays because lenders, including RBS/NatWest, are not yet producing key documents online. Some brokers and appointed representatives are unable to trade because their authorisation numbers are not available for checking.

The regulator said accusations of mortgage chaos were 'overdone'.

Ray Boulger of mortgage broker Charcol said: 'There are serious issues, not isolated events.'