You are here: Home - News -

Mortgage lending rules may have become too strict – AMI

by:
  • 22/12/2017
  • 0
Mortgage lending rules may have become too strict – AMI
Changes in the debt of British households suggest that mortgage lending rules could have become too strict, the Association of Mortgage Intermediaries (AMI) said.

Surging growth of consumer credit comes as Bank of England research shows half of all UK households with a mortgage say they have found it easier or cheaper to get a personal loan than to raise further funds through a remortgage, second charge or further advance.

The worrying trend raises the question that tightening in mortgage lending may have gone too far, and was encouraging consumers to turn to other more expensive forms of debt, the AMI said in its latest quarterly economic bulletin.

The  report said: “Continued growth and households’ clear reliance on unsecured credit raise perhaps uncomfortable questions over whether tightening in the mortgage market, where there is underlying security with potential for capital growth and where rates of interest are consequently far lower, has gone too far and is encouraging households to take on debt in other formats.”

 

Transactions and approvals to remain flat in 2018

The trade body also forecast mortgage approvals and housing transactions were set to remain flat in 2018, as the remortgage markets drove a rise in overall lending.

Rates across the market will remain very competitive and margins narrow over the coming year, the trade body predicted in the report.

However, high loan to value (LTV) rates and new build rates may lift in the next 12 months, the AMI added.

Gross lending is expected to rise to £265bn, and brokers will continue to offer value in specific markets including buy-to-let, self-employed and lending into retirement.

 

Regulating product transfers

The AMI also stressed that the regulator expects intermediaries to take product transfer clients through the same process as a remortgage.

Open Banking rules and liability poses some “significant” questions for brokers and the digitisation of advice, the trade body said.

Brexit has also been highlighted as a consideration for 2018 – with political changes potentially affecting the housing and mortgage markets amid changes to migration, the value of sterling and foreign investment appetite.

There are 0 Comment(s)

You may also be interested in

Business Skills

In this section, we offer short ‘how to’ guides on harder to crack areas of business. From social media, to regulation or niche product areas, we cover it all.

Profiles

Our journalists interview key industry entrepreneurs, strategists and commentators for day-to-day market insight and a strategic view of where the industry is heading. We offer lessons for success and explore the opportunities for your business

Success in Practice

Here, we share case studies fleshing out best practice to help you decide what could work for your business. Take a look at how others approached complex tasks like launching a new mortgage lender, advising on a new product area or deciding to specialise in another. Learn from others mistakes and triumphs.

Marketwatch

Each week, we ask top mortgage and property commentators with a unique perspective to examine a key news headline, market move or regulatory or political issue.

Poll

Vote in our weekly poll here. It’s your chance to tell us what you think and be heard on the top news stories of the week. Review our archive to find out what your industry really thinks and all our coverage of the results.

Top Comments

Be part of the conversation on Mortgage Solutions. We want to hear from you. We have a tool called Disqus to tell us which stories get the most comments each week. Every Friday, the team picks the most thoughtful or opinionated contributions from our readers to enjoy again. Don’t forget to share your favourite stories from the site on social media to keep the conversation going.

Read previous post:
Co-op Group sells stake in NOMA development

Hermes Investment Management has bought The Co-op Group’s entire share interest in the sites and buildings within their NOMA joint...

Close