Change in the mortgage lending landscape

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New mortgage rules were introduced to lenders last month as part of a Mortgage Market Review (MMR). The rules introduce at least five key changes for borrowers and are being introduced to reinforce consumer protection. The Financial Conduct Authority (FCA) will oversee the changes and apply them across the whole industry.

The MMR package of reforms is aimed at ensuring the continued access to mortgages for the great majority of customers who can afford it, while preventing a return to the poor practices of high risk lending that we saw in the past.

Lenders have been working for many months to ensure they are ready to comply with the new rules and, in some instances, firms are already applying parts of the new rulebook. But many consumers are still largely unaware of the changes and what they will mean. As far as firms themselves are concerned, a recent survey by the FCA of almost 4,000 lenders and brokers found a high degree of readiness for introducing the new rules. Key findings from the survey included:

  • All firms planning to conduct mortgage business say they will implement the MMR on time.
  • Less than 1% of firms – all of them thought to be small brokers – say they will not be ready by 26 April. But those firms say they will not undertake any mortgage business until they are fully prepared.
  • A large majority of all firms (85%) have plans for moving to the new rules that are either complete or partially complete.
  • Only a tiny proportion of lenders have asked the regulator for any further information. Of 172 lenders responding to the survey, just seven (4%) have done so.