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Santander reveals MCD plans – exclusive

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  • 02/09/2015
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Santander reveals MCD plans – exclusive
Santander has revealed details of its Mortgage Credit Directive (MCD) preparations ahead of next year’s March deadline.

The lender is reviewing its buy-to-let offering in light of the creation of a consumer category brought about by the Financial Conduct Authority to comply with the MCD. Consumer buy-to-let transactions will become regulated mortgages and refer to borrowers who did not intend to invest in property but accidentally became landlords. Let-to-buy customers are expected to be the largest group of borrowers caught in the new category.

The bank confirmed it is working on its proposition and by the end of the year it plans to change its system to identify consumer and investment buy-to-let customers.

Santander will use an enhanced version of the Key Facts Illustration (KFI) from quarter one next year ahead of the implementation date of 21 March.

Lenders have been given the option to switch to the European Standardised Information Sheet (ESIS) which will become the compulsory form of disclosure for mortgage information by 21 March 2019 or add on to their existing KFIs to make them compliant with the directive.

Graham Sellar, head of business development at Santander UK, said: “MCD is set to be introduced in March 2016, MMR [Mortgage Market Review] brought affordability to the fore in the market and we believe we operate within the legislation collecting all the information required. We will continue to operate within the regulatory conditions outlined in MCD, introducing the KFI addendum in Q1 2016.”

Changes will shortly be introduced to its mortgage application to include foreign currency fields for borrowers who need to use foreign income for affordability which Santander said will avoid customer disruption in March. If the borrower is resident in the UK the bank will take into account foreign income in all major currencies.

Ian Gray, partner at specialist broker Large Mortgage Loans, said there had been no change to Santander’s lending policy but being able to key in foreign income would make it easier for brokers to find out what size mortgage the borrower can afford. Currently brokers need to call in to Santander to discuss using foreign income over the phone.

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