By . Becky Barrow . PUBLISHED: . 17:12 EST, 23 October 2012 . | . UPDATED: . 03:49 EST, 24 October 2012 . Tough rules on lending will make Britain’s mortgage drought permanent – hitting millions trying to get on the property ladder. Some of the biggest losers will be those in their 50s who want to trade up to a  bigger house or to acquire a second home. The Council of Mortgage Lenders warned that people who want to take out an interest-only mortgage will also be affected. Crackdown: Tough rules on lending will make Britain's mortgage drought permanent - hitting millions trying to get on the property ladder . In future, these borrowers will have to show that they are saving a pot of money to pay off the capital when the mortgage matures. The crackdown by the Financial Services Authority is designed to prevent a repeat of the reckless lending which led to the financial crash. Under the changes, to be revealed tomorrow, the City regulator is expected to force lenders to make sure that a mortgage cannot be handed out unless a homeowner will repay it before their 70th or 75th birthday. As a typical mortgage is for 25 years, . this will create problems for people currently in their 50s. For . example, a person who is 55 will struggle to get a 25-year loan because . it would not be paid off until they were 80. David . Hollingworth, from the mortgage advisers London & Country, said . banks and building societies are already clamping down ahead of the . FSA’s ‘Mortgage Market Review’. Changes: Some of the biggest losers will be those in their 50s who want to trade up to a bigger house or to acquire a second home . He said: 'Nearly all lenders will say, "If you want this mortgage, you must have repaid it by the time you are 75, or even 70".' Another change will be a crackdown on interest-only mortgages, the cheapest type of mortgage which helped millions to buy their first home or a larger property in the past. An interest-only deal is cheaper than . other types of mortgage because it allows people only to pay the . interest on the loan, but not a penny of the actual loan. A . key new rule, expected to be unveiled tomorrow, will force lenders to . make sure all homeowners build up a separate pot of money to pay off the . actual loan. Tricky: Another problem surrounds Britain's 4.2million self-employed workers who will face an even bigger battle to get a mortgage . They will also be required to check ‘at least once during the mortgage term that it [the savings pot] is still in place’, according to the Council of Mortgage Lenders. Lenders have already started to cut back radically on their interest-only mortgage deals ahead of the widely expected change. This month, Nationwide, Britain’s biggest building society, abruptly announced it had decided to stop offering interest-only mortgage deals to new customers. It is a landmark moment for the mortgage industry. Of the 11.2million mortgages, figures from the FSA estimate around 43 per cent are interest-only deals. Mark Harris, of the mortgage broker SPF Private Clients, said: ‘Many people are already delaying getting on to the housing ladder to the age of 35 and beyond. ‘It is going to get tricky for them because of the new age restrictions, such as when they need to remortgage.’ Another problem surrounds Britain’s 4.2million self-employed workers who will face an even bigger battle to get a mortgage. Before the credit crunch, it was relatively easy for the self-employed to get a loan without providing much evidence of their earnings. The FSA’s new rules are expected to make it more difficult, such as demanding two years of audited accounts, which many will struggle to provide or simply do not have. A Council of Mortgage Lenders spokesman said: ‘The FSA has already trailed the broad outline of the forthcoming regulatory changes for a long time, and the mortgage market has to a great extent already absorbed and planned for them. ‘On the one hand, this means that consumers are unlikely to suffer significant additional impacts as a result of the changes. On the other hand, it also means that the relatively high hurdles for customers in getting a mortgage are likely to remain a permanent feature of the mortgage market.’ The council’s figures highlight the fall in the number of loans handed out to buy a house. In August 2007 – the month the credit crunch struck – 103,000 house purchase loans were made available. In August this year, there were only 55,300.
Some of the biggest losers will be those in their 50s who want to trade up to a bigger house or to acquire a second home .
The Council of Mortgage Lenders warned that people who want to take out an interest-only mortgage will also be affected .
Designed to prevent repeat of reckless lending which led to financial crash .
By . Becky Barrow . PUBLISHED: . 17:12 EST, 23 October 2012 . | . UPDATED: . 03:49 EST, 24 October 2012 . Tough rules on lending will make Britain’s mortgage drought permanent – hitting millions trying to get on the property ladder. Some of the biggest losers will be those in their 50s who want to trade up to a  bigger house or to acquire a second home. The Council of Mortgage Lenders warned that people who want to take out an interest-only mortgage will also be affected. Crackdown: Tough rules on lending will make Britain's mortgage drought permanent - hitting millions trying to get on the property ladder . In future, these borrowers will have to show that they are saving a pot of money to pay off the capital when the mortgage matures. The crackdown by the Financial Services Authority is designed to prevent a repeat of the reckless lending which led to the financial crash. Under the changes, to be revealed tomorrow, the City regulator is expected to force lenders to make sure that a mortgage cannot be handed out unless a homeowner will repay it before their 70th or 75th birthday. As a typical mortgage is for 25 years, . this will create problems for people currently in their 50s. For . example, a person who is 55 will struggle to get a 25-year loan because . it would not be paid off until they were 80. David . Hollingworth, from the mortgage advisers London & Country, said . banks and building societies are already clamping down ahead of the . FSA’s ‘Mortgage Market Review’. Changes: Some of the biggest losers will be those in their 50s who want to trade up to a bigger house or to acquire a second home . He said: 'Nearly all lenders will say, "If you want this mortgage, you must have repaid it by the time you are 75, or even 70".' Another change will be a crackdown on interest-only mortgages, the cheapest type of mortgage which helped millions to buy their first home or a larger property in the past. An interest-only deal is cheaper than . other types of mortgage because it allows people only to pay the . interest on the loan, but not a penny of the actual loan. A . key new rule, expected to be unveiled tomorrow, will force lenders to . make sure all homeowners build up a separate pot of money to pay off the . actual loan. Tricky: Another problem surrounds Britain's 4.2million self-employed workers who will face an even bigger battle to get a mortgage . They will also be required to check ‘at least once during the mortgage term that it [the savings pot] is still in place’, according to the Council of Mortgage Lenders. Lenders have already started to cut back radically on their interest-only mortgage deals ahead of the widely expected change. This month, Nationwide, Britain’s biggest building society, abruptly announced it had decided to stop offering interest-only mortgage deals to new customers. It is a landmark moment for the mortgage industry. Of the 11.2million mortgages, figures from the FSA estimate around 43 per cent are interest-only deals. Mark Harris, of the mortgage broker SPF Private Clients, said: ‘Many people are already delaying getting on to the housing ladder to the age of 35 and beyond. ‘It is going to get tricky for them because of the new age restrictions, such as when they need to remortgage.’ Another problem surrounds Britain’s 4.2million self-employed workers who will face an even bigger battle to get a mortgage. Before the credit crunch, it was relatively easy for the self-employed to get a loan without providing much evidence of their earnings. The FSA’s new rules are expected to make it more difficult, such as demanding two years of audited accounts, which many will struggle to provide or simply do not have. A Council of Mortgage Lenders spokesman said: ‘The FSA has already trailed the broad outline of the forthcoming regulatory changes for a long time, and the mortgage market has to a great extent already absorbed and planned for them. ‘On the one hand, this means that consumers are unlikely to suffer significant additional impacts as a result of the changes. On the other hand, it also means that the relatively high hurdles for customers in getting a mortgage are likely to remain a permanent feature of the mortgage market.’ The council’s figures highlight the fall in the number of loans handed out to buy a house. In August 2007 – the month the credit crunch struck – 103,000 house purchase loans were made available. In August this year, there were only 55,300.
Some of the biggest losers will be those in their acquire a second home. The Council of Mortgage Lenders warned that people who want to take out an interest-only mortgage will also be affected. to prevent a repeat of the reckless lending which biggest losers will be those in their 50s who want to trade up to a bigger house or to acquire