Speaking to MPs at an economic affairs committee meeting, Noakes said the fact that a first-time buyer and a home buyer who has been through the mortgage experience several times receive the same treatment makes no sense.
“The process is now much more rigorous and you could [ask] whether it delivers the best customer experience. If you go into a Lloyds Banking Group branch and sit down and have a mortgage interview, you could be there for two and a half hours. For a first-time buyer who also needs their hand holding in terms of what the house purchase process looks like more holistically, that’s maybe not a bad thing. But for someone who is maybe on their third house move and feels that they know the market pretty well, they’ll still have to go through that same process.”
Noakes explained that this brought challenges in how lenders could deliver an improved customer experience while keeping the regulators satisfied.
However, Noakes disputed that acceptance rates on mortgages have fallen since the introduction of the MMR in 2014.
“There is no doubt that if you go back to the industry of 2006 you had self-certification mortgages and you had laxer underwriting standards. Interestingly if you look at the accept rate before the implementation of the Mortgage Market Review and then post, they’re not dramatically different,” he said.
During a discussion on self build, Noakes added that the loan-to-value (LTV) loan limit adopted by most lenders for these types of properties meant that many first-time buyers were blocked from the market.
He explained that local authorities could help to take some of the risk out of this lending by taking part in the early stage of property development.
“Typically we and the rest of the industry will look to cap out at 75% LTV, so if you’ve got prospective first-time buyers who want to self or custom build, then that’s almost impossible, but the opportunity is actually for another party to play the role of the developer and take that risk out. This is where the government are trying to encourage the local authorities in terms of the right to build, so they have to survey the local area and determine how much interest there is.”
Noakes added: “If we’re working in a situation where we agreed an approval in principle to the prospective first-time buyer and self-builder, they [local authorities] could develop on their behalf and I think that is a model that we could actively pursue.”