The Financial Conduct Authority says it intends to use two consultation periods this summer to “make meaningful changes” to the mortgage market.
The FCA director of retail banking Emad Aladhal said the watchdog will use the next few months to lay out proposals to make remortgaging to a new lender easier, to test the “market’s collective appetite for risk” and “create space for innovation”.
Aladhal said: “We will use this discussion to help inform where we can make meaningful change to support this industry and consumers.
“We are listening and considering carefully about where to target our efforts to deliver a more innovative and accessible market.”
Aladhal was speaking at the Building Societies Annual Conference this afternoon in Birmingham, the city where the first building society was set up 250 years ago in 1775.
The FCA’s director of retail banking said it has today begun the first of two studies into liberalising the mortgage market.
The first primarily proposes ways to make it easier to:
- remortgage with a new lender
- reduce the overall cost of borrowing through term reductions
- discuss options with a firm, whilst still having the option to seek advice if needed
This will end on 4 June and publish a policy statement in the third quarter of this year.
But then later in June, Aladhal said the watchdog will publish a second wider-ranging paper “on the future of the mortgage market and conduct regulation”.
He said the issues it will explore include:
- the market’s collective appetite for risk, and how we might approach managing changes to risk appetite
- how we can create space for innovation, for example, through changes to affordability assessments
- how customers are supported to access the market and make the right choices, for example, through changes to our disclosure requirements
- how we ensure we are all prepared for an increase in demand for later life lending
Aladhal said that although there were just 1,000 repossessions in the fourth quarter of last year, “fewer than in any quarter before the second quarter of 2020,” the market had more to do.
He said: “We also know it’s a market that some creditworthy people can struggle to access, with home ownership an increasingly challenging aspiration for many.”
He pointed out: “If you are single; have no familial support; paying rent that is as much, or more, than a mortgage payment; have irregular income; self-employed; or faced any previous financial difficulty — you are much less likely to secure a mortgage.”
Aladhal said: “Our aim is a mortgage market that works better for all potential borrowers who can afford to repay. Including those who currently find it less accessible than they should, saddling them with higher rents and less security.”
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