The City watchdog plans to introduce stricter regulations on the mortgage sector, making it more difficult for borrowers to access self-certification mortgages and others with higher-risk elements.

Borrowers will also face affordability tests to ensure they are able to pay, under plans for "more intrusive" regulation of the sector.

As well as proposing a ban on self-certification mortgages, the Financial Services Authority (FSA) wants buy-to-let lending and other loans taken out against property, to be regulated.

Hector Sants, chief executive of the FSA said the proposals would mean some people who were previously able to obtain mortgages may no longer be able to.

Mortgages lending a large amount of a property's value to people with poor credit histories would be banned, but the FSA said it would not propose to ban high loan-to-value mortgages all together.

However, it did warn that it had not ruled out imposing caps if its initial proposals did not have sufficient effect on the market, as part of a new "blunt approach".

The proposals would also give the responsibility for assessing a customer's ability to pay the lender, who must examine their income.

This will bring an end to both self-certification mortgages, which were aimed at self-employed people with irregular incomes, and fast-track mortgages, under which people did not have to prove their income.

Self-certification mortgages were initially introduced as a niche product, but during the lending boom they accounted for just under half of all advances.

However, the proposed ban is likely to have only a limited impact on the market, as the majority of lenders have withdrawn from the sector since the credit crunch struck, and there is currently only one firm offering the deals.

Copyright © Press Association 2009