Financial Conduct Authorities said it intends to use two advisory periods this summer to “make meaningful changes to the mortgage market”.
EMAD Aladhal, head of retail banking at FCA, said the supervisory authority will use the next few months to make proposals easier to re-responsibility to more easily test “the market’s collective appetite for risk” and “innovation space”.
“We will use this discussion to help us where to make meaningful changes to support the industry and consumers,” Aladhal said.
“We are listening and carefully considering efforts to provide more innovative and accessible markets to our efforts.”
Aladhal addressed this afternoon at the annual meeting of the building society in Birmingham, where the city established its first architectural association in 1775.
FCA’s director of retail banking said the first of two studies on liberalized mortgage markets has begun today.
The first major proposed method makes it easier:
- Pay payment with new lender
- Reduce the total cost of borrowing by reducing maturity
- Discuss options with the company while still having the option to seek advice if needed
This will end on June 4 and a policy statement will be issued in the third quarter of this year.
But Aladhal said late June that Watchdogs will publish a second, broader paper, “on the future and conduct regulations of the mortgage market.”
He said the issues it will explore include:
- The collective appetite for risk in the market and how we deal with changes in managing risk appetite
- For example, how do we create space for innovation by changing affordability assessments
- How to support customers to access the market and make the right choices, for example, by changing our disclosure requirements
- How we make sure we are all ready for increasing the need for future loans
Aladhal said that despite having only 1,000 favorites in the fourth quarter of last year, “less than any quarter before the second quarter of 2020,” the market has more to do.
“We also know that this is a market that people with good reputations can work hard to enter, and home ownership is becoming increasingly challenging for many,” he said.
“If you are single; without family support; pay as much or more rent than mortgage payments; irregular incomes; self-employed; or face any previous financial difficulties – you are much less likely to get a mortgage.”
“Our goal is a mortgage market that works better for all potential borrowers who are able to repay,” Aladhal said. “Including those who currently feel it is more obstacles than they should have, making them sad with higher rents and less security.”
