Mortgage News
MMR: New rules will embed common sense into mortgage market – FSA
The Financial Services Authority (FSA) has published new rules which it said will ‘put common sense at the heart of the mortgage market’ and try to prevent borrowers taking out unaffordable mortgages.
The FSA’s Mortgage Market Review (MMR) has set out the new rules which will come into effect on 26 April 2014.
The regulator said that the majority of proposals published in December 2011 remain unchanged.
Martin Wheatley, managing director of the FSA and CEO-designate of the Financial Conduct Authority (FCA), said: “These new rules will help create a more sustainable market that works well for everyone, whether a borrower or a lender.
“We recognise that many lenders are now using a far more sensible set of lending criteria than before, but it is important that these common sense principles are hard-wired into the system to protect borrowers.
“We want borrowers to feel confident that poor practices of the past, which led to hardship and anxiety, are not repeated. At the heart of the new measures is an affordability test to check borrowers can meet the repayments of the mortgage they want.
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“To ensure the measures are effective but practical we spent a great deal of time discussing our proposals with consumers, firms, parliamentarians and numerous other stakeholders. I am therefore very confident that we have come up with a set of rules that are proportionate and sensible, and will create a more sustainable mortgage market where consumers are put at the heart of every decision.”
Paul Broadhead, head of mortgage policy at the Building Societies Association (BSA), said: “The proof of the FSA’s stated ‘hard wired common sense’ approach will come as the regulations are passed from policy makers to supervisors. The industry needs the confidence that in practice the FSA will supervise to deliver against the spirit of their stated objectives.
“We still don’t believe that the need for a virtually fully advised mortgage market has been justified, however the clarification on what is in and what is out is helpful as our members start to prepare.”
Paul Smee, CML director general, added: “In practical terms, the regulatory changes have already been widely anticipated and so are unlikely to create any significant additional or unexpected impacts.”
Peter Williams, executive director of the Intermediary Mortgage Lenders Association, commented: “The FSA has made adjustments in the light of industry feedback and our initial view is that its new rules will not damage the market but that they will also do little to reinvigorate a housing market that remains at a low ebb (beyond the clarity it offers).”