The Financial Conduct Authority (FCA) has requested information from multiple sources regarding concerns over the way the UK mortgage market is being handled. The FCA is intending to begin a full study of the mortgage marketplace in 2016, but its immediate request will act as a prelude to that.
Information is not just being sought from lenders and brokers in the marketplace, but from members of the public as well. As such, the exercise should help identify problems in the marketplace that are preventing people from moving house or getting on the housing ladder in the first place.
The consequences of the Mortgage Market Review
The Mortgage Market Review (MMR) rules have been in place since April 2014. During the intervening 18 months or so, many people have discovered it has become much harder to get a mortgage than was previously the case. This is because the rules have ensured it is now impossible to exaggerate your earnings or to be coy about your outgoings. The financial crisis that occurred a few years’ ago led many people to default on their mortgage payments because they could no longer afford to make ends meet after overstretching themselves.
So now, the FCA wants to know how those rules have worked in the real world. They are looking for input from people who have struggled to find an appropriate home loan, or struggled to be accepted for one. The watchdog will be looking into cases where people may have been unfairly turned down for a mortgage.
Many people have welcomed the investigation, as it will highlight occasions where lenders have been too strict with the new rules. In some cases people have been unable to get cheap deals because there was a lack of competition. In other cases older borrowers have been told they are too old to be accepted for a mortgage.
The whole idea behind this investigation by the FCA is to identify problems that have come up within the housing market. The FCA’s business plan for the coming year spoke of being “mindful of any emerging patterns of economic stress for younger consumers.” Clearly they have a close eye on the struggles younger people are having with regard to getting on the housing ladder for the first time.
The FCA wants to know how easy it is for people to find a suitable mortgage product from a lender. Other issues such as competition (or a lack of it) are also key to the research. There are also concerns that some would-be borrowers have been turned down for a mortgage simply because of their age. There have been cases of this happening even when people have been able to prove they can make the payments and have cash behind them to pay off the balance too.
No doubt many people will await the results of this effort by the Financial Conduct Authority to delve into the current state of the mortgage market. It could reveal some interesting facts along the way.