The changes will take place in mid-January 2016, two months ahead of the 21 March deadline. It will monitor only the main source of foreign currency income for each mortgage. It will continue to accept only sterling-based repayment strategies for interest-only mortgages but borrowers can use foreign income to make interest payments.
NatWest and Lloyds Banking Group have announced they will begin using the European Standard Information Sheet (ESIS), to be known in the UK as the Mortgage Illustration, ahead of the deadline. The Mortgage Illustration will include additional disclosures for customers to ensure that they fully understand the mortgage product they are taking out and the risk of future interest rate increases.
Lloyds Baking Group ceased lending to borrowers using foreign currency income to support a new mortgage or re-mortgage application across all its brands in September.
NatWest will continue to use a consent-to-let form for its existing mortgage customers letting out a property on a residential mortgage. It expects demand for consumer buy to let to low. It plans to monitor the emerging market and make a decision on whether to introduce consumer buy-to-let mortgages towards the end of 2016.
Sarah Taylor, service development manager, Natwest Intermediary Solutions said: “The MCD is a significant piece of legislation for the industry but one that we are well placed to deal with. […] By switching directly to the new Mortgage Illustration, it will mean making only one change to our systems which has to be good news for intermediaries.”