The cost of UK bank finance will likely rise in the event of a no-deal Brexit, according to the trade body.
And Bank of England governor Mark Carney “was right to sound a warning bell” after he predicted house prices could fall by as much as a third in the worst-case Brexit scenario, AMI said in its third quarter economic bulletin.
The trade body added: “A hard Brexit or deal that falls short of certain crucial trade agreements could cause GDP to crash in the UK and result in hundreds of thousands of British workers losing their jobs.”
At the same time, the end of the Help to Buy scheme could have a detrimental impact on the housing market, it was warned.
If the initiative is not extended, the loan to value (LTV) on new build mortgages are likely to fall back as approvals on purchases “stumble”.
The effect would be further pressure on remortgages to sustain lending, as values on new build properties fall.
Product transfers show market needs rethinking
The significant sizeof the product transfer market, recently published by UK Finance, suggests a shake-up is needed of how lending is measured, AMI said.
Net lending must be the focus, rather than gross, after data showed around £53bn of product transfers were done in both the first and second quarter of 2018.
Product transfers do not feature in market data of gross lending or remortgages.
Finally, AMI raised the measures of consumer services following the Financial Conduct Authority’s (FCA) interim report of the Mortgages Market Study.
Price is just one consideration of a service, the trade body said, adding that “speed, efficiency, ease, communication, effectiveness” could be seen as a larger component of choice.
AMI chief executive Robert Sinclair (pictured) has recently raised concerns of overlapping in the study with other areas of the FCA’s work.
