Welcoming the long overdue publication of the FSA’s proposals into the Mortgage Market Review, Grenville Turner, Chief Executive of Countrywide, the UK’s largest mortgage broker and property services group said;
“Mortgage advice does not allow for a one size fits all policy and we’re pleased the MMR proposals finally accept this. It is widely acknowledged that the current mortgage advice process is confusing for customers. The FSA has responded to customers’ needs and simplified this process by scrapping the non-advised process favoured by most banks and have proposed measures to allow the majority of customers to receive the right advice based on their circumstances from qualified advisors, whether by telephone, online, in a bank branch or with a mortgage broker.”
Will these proposals make it easier to get a mortgage?
“Where the proposals fall short, by the FSA’s own admissions, is that 1 in 40 of new customers that would currently be eligible for a mortgage could potentially struggle to get a mortgage if the proposals were introduced in this market. In an environment where lenders are already being extremely cautious with their lending criteria; by placing all affordability assessments at the doors of lenders risk teams this could create an even stricter lending environment.
“To ensure that these measures do not stagnate the market further, lenders will need to become more flexible with the affordability assessment criteria for new borrowers including a workable replacement for the self-employed and homeowners stuck in negative equity.”
“Under the proposals, self-certified mortgages are a thing of the past due to the requirement for every mortgage to be income verified. However, lenders now have an opportunity to adapt their verification procedures to ensure that self-employed customers, who traditionally used self-certified products are not left out in the cold. One of the measures that can be considered is assessing the spending patterns of the applicant rather than entirely focusing on income levels.”
Regulation and professionalism in the industry
“Whilst we wholly support the FSA’s recommendation on ensuring that all mortgage advisors are fully qualified with an appropriate and approved qualification, it is disappointing to see that the FSA has stopped short of making clear their intentions on individual registration.
“At Countrywide, we firmly believe that this would cement the foundations for a level playing field for professional standards in the mortgage industry as well as assist in fraud prevention measures. We would urge the FSA to reconsider this during the consultation process, as necessary qualifications combined with individual registration raises industry standards and professionalism, which can only be a positive outcome for consumers.”