Paul Broadhead, head of mortgage policy at the BSA, said: "The devil is always in the detail but these proposals seem to represent a welcome shift in policy by the FSA.
“No-one is looking for a regime that permits lax lending practices, however the original proposals were in danger of locking credit worthy borrowers out of the market or imprisoning those with immaculate payment records, but non-standard profiles, in their current homes and loans.
"This seems to have been avoided which is good news for the self-employed, those in existing self certified mortgages and people with negative equity.”
Broadhead added that the new regulations appeared to have struck a reasonable balance between allowing lenders flexibility when assessing affordability whilst maintaining a sensible level of consumer protection.
“The transitional arrangements will help people who already have a self-certified mortgage - banned under the new proposals - re-mortgage to a more standard loan,” Broadhead said.
“Lenders will be able to take into account borrowers repayment performance rather than a prescriptive set of income and affordability criteria.
"We are pleased that the FSA has addressed our concerns. A thriving and competitive market, which encourages innovation to support the ever changing needs of would-be home owners and home movers, is in all our interests."
