Financial conduct authorities challenge lenders how lenders “rebalance” how they view risks by considering mortgages and unlocking later life household wealth markets.
Although the mortgage market is “resilient”, it has become “a area that some reputable people can hardly enter”.
“Affordability has been stretched, and more consumers are borrowing longer, and many people are expected to pay their mortgages back later on their lives,” the regulator said.
“In the coming years, retiring to mortgage debt will no longer be a niche, but more and more norms.
“Is security the price to get a reputable borrower? Is the proper balance reached?”
“And, if the market is to adapt to its risky appetite – to further expand access – how can we do so without undermining the overall principle to lend responsibly?”
The watchdog has promised that the second summer review in June will be a broad paper, “the future and conduct regulations of the mortgage market”.
The FCA said the review will cover:
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For example, how do we create space for innovation by changing affordability assessments
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How to support customers to access the market and make the right choices, for example, by changing our disclosure requirements
Yesterday, Aladhal asked lenders to consider “how to assess affordability and default risks in a way that supports more customers to obtain loans.
He added: “How does a client’s savings record (via cash, ISA or their pension) form part of their risk profile when applying for a mortgage?”
Regulators have also urged lenders to take a closer look at the stock issuance market.
He noted: “Housing is an important store of value: there is about 9.1 tonnes of housing stock in the country – for current retirees, full ownership is the fastest growing term.
“Are we ready to support more older homeowners to acquire housing wealth?
“It’s important that in later life, some sort of mortgage is the right choice – how to make it more attractive and offer greater value?”
“We are already listening and carefully considering where to target our efforts to provide a more innovative and accessible market,” Aladhal added.
