The Financial Conduct Authority (FCA) wants to make it easier for more people to get a mortgage.
Currently, there are strict rules in place which mean that when lenders decide whether to approve a mortgage, they test whether a borrower could still afford the repayments at higher interest rates in the future.
However, the FCA says that as interest rates fall, the current market approach to interest rate stress testing may be unduly restricting access to otherwise affordable mortgages.
It says it wants to ensure that lenders are aware of the flexibility its rules provide, and that creditworthy consumers can access the affordable mortgage they need, supporting home ownership.
To consider further improvements quickly, the FCA will shortly launch a call for evidence on current and alternative approaches to stress testing.
Then in May, it will begin a consultation proposing early ideas to simplify its rules and benefit mortgage consumers, making it easier to:
• remortgage with a new lender
• discuss their options outside a regulated advice process
• reduce their mortgage term
And in June, the FCA will open a public discussion on the future of the mortgage market. Alongside all interested parties, the FCA will consider what the market needs to deliver for different consumers at different stages in their lives and the wider UK economy, and the role of regulation to deliver it.
Nikhil Rathi, Chief Executive of the FCA, said: “We are taking swift action to support people in getting the keys to their own home.
“Firms have the flexibility to help more people become homeowners and we want them to use it.
“There is more to be done, and we will be delivering further proposals quickly to support home ownership and the wider UK economy.”
We shall keep clients informed of developments.
Please contact us if you would like advice about the legal aspects of buying or selling a home.
