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MMR is just the beginning of regulatory change – BSA

by: Paul Broadhead
  • 23/04/2015
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MMR is just the beginning of regulatory change – BSA
The Mortgage Market Review (MMR) has permanently hardwired more conservative lending into the UK market which has been seen since the end of 2008.

Considering the scale of change resulting from MMR, including mandatory advice and affordability assessments, building societies have responded well in terms of overall lending volumes. Interestingly, the volume of business through intermediaries has risen in line with some societies at or nearing 100%.

Apart from a brief dip in lending in the run up to the introduction of MMR and the following month, building society approval and gross lending numbers continued to grow throughout last year and have kept pace so far in 2015.

Fortunately the type of headlines we initially saw in the wake of the MMR which warned that borrowers would be unable to get a mortgage as a result of their spending habits, have not become a trend.

Sadly, the same cannot be said for some lenders who are failing to properly employ the transitional rules to ensure existing clients are not trapped on more expensive rates.

Use of the transitional rules is clearly still an area that needs work, a job that’s been made more complicated with the removal of transitional rules for borrowers changing lender in the final Mortgage Credit Directive (MCD) rules.

As demonstrated by this recent modification, far from marking the end of regulatory change in the mortgage market, the MMR is really just the beginning.
The new date for the industry’s calendar is 21 March 2016 when the MCD will be implemented.

MCD brings with it yet another set of rules for lenders requiring changes to their systems and processes. Plus a big risk of some pretty serious consumer confusion – there is a real argument for an industry consumer communications programme. The changes brought in last year could continue to reverberate for years to come.

Paul Broadhead is head of mortgage policy at the Building Societies Association

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