Industry welcomes changes to boost supply to underserved markets
The market has welcomed the FCA’s announcement of mortgage rule changes to improve the supply of mortgages to underserved markets, including the self-employed and the elderly.
Julian Sampson, partner and head of lending department at TWM Solicitors, said: “There are still significant parts of the UK’s population who struggle to access competitively priced mortgages so any encouragement from the regulator which will support mortgage innovation should be welcomed.”
“The elderly and the self-employed are two critical markets that are expected to continue to grow. The tough economy of the last few years has meant a lot of people picking up minor marks against their credit histories that don’t reflect their current ability to service a mortgage.”
Sampson said providing greater access to mortgages for the elderly to help them downsize would also help to boost housing stock. “The ageing population is creating an immovable lock-up of equity as they are unable or unwilling to downsize without viable mortgage products to support them in doing so.”
“If they were more easily able to downsize, they could release housing stock into the market and cash into the economy. The retirement interest-only mortgage has not been as popular as one might think, so any means of loosening the terms of this product must be welcomed.”
‘A positive step forward’
Michael Shand, managing principal at financial services and technology consultancy Capco, called the announcement “a positive step forward in the continued efforts to modernise the mortgage framework so it better reflects changing consumer circumstances”.
“The focus on allowing lenders to consider a more holistic view of borrowers’ finances is also positive. Moving beyond rigid or overly binary affordability assessments will be helpful in allowing lenders to better reflect the realities of modern income patterns and cater for those with variable earnings or more complex financial profiles.
He said it was also encouraging to see the regulator actively seeking input from consumers throughout the consultation process. “This should hopefully result in a final set of regulations that strike the right balance between access, protection and practicality,” he said.
