However, the Financial Conduct Authority (FCA) is launching a review into mortgage advice and will address whether the tough mortgage rules are actually working. More specifically, it will look into the lack of consumer-friendly technology and the process of switching mortgage deals with an existing lender, to name a few.
This could prove to be a real lifeline for those who have been unable to buy a home due to tough mortgage rules that were introduced back in 2014. These underserved groups of borrowers include the self-employed, the retired and contract workers.
It can be argued that the MMR rules have made it more difficult and more expensive for some borrowers to get a mortgage and, in many cases, has contributed to the outcomes for many consumers. It is therefore promising that the regulator has listened to the industry and is doing something about it.
It is also worth mentioning that the employment landscape has seen significant changes in recent months. In fact, according to the Office for National Statistics (ONS), the jobs market stagnated in the three months to October, suggesting that employers are slowing their hiring in the wake of the Brexit vote. In addition, people are in very different types of jobs now, such as zero hours contracts. Therefore, the FCA has to allow lenders to be even more flexible when assessing these particular individuals. This is where innovation really comes into play.
However, it seems that the FCA is worried that these rules could be scaring intermediaries and lenders and is stopping them from providing more flexible mortgages needed by borrowers in more unusual circumstances.
It is important that competition in the mortgage market is healthy and is always working to the benefit of the consumer. A mortgage is one of the biggest financial commitments most of us make in our lifetime so I am very supportive of this review, particularly if it helps to ensure the market allows the right product to get to the right customer. It will certainly be interesting to see what the regulator reports in its preliminary findings in 2017, with final rules to follow in 2018, so watch this space.