The regulator is launching a consultation in Spring on moving affordability assessments to a ‘relative test’ rather than treating everyone as a new customer – with the idea being to protect mortgage prisoners with inactive lenders.
The Financial Conduct Authority must have sufficient powers to protect customers who can’t or won’t switch to another lender, UK Finance’s director of mortgages Jackie Bennett has said.
The regulator is launching a consultation in Spring on moving mortgage affordability assessments to a ‘relative test’ rather than treating everyone as a new customer – with the idea of helping mortgage prisoners withinactive lenders to remortgage with another lender.
But Bennett, speaking at the UK Finance Annual Scottish Mortgage Lunch, said: “It will be a commercial decision for each lender as to whether this is something they will wish to offer.
“Not all customers are likely to benefit as some will have circumstances that are likely to put them outside of the commercial risk appetite of lenders.
“This might include customers who are in arrears, in negative equity or have considerable other debts.
“Customers may have other reasons for not wanting to switch if they have a low balance or a short time left on their mortgage.
“That is why alongside any changes the FCA makes we believe government and FCA should ensure that the FCA has sufficient powers to protect customers who can’t or won’t switch, particularly where the book owner is not regulated.”
Scotland
Bennett also called for clarity on the Help to Buy Scotland scheme, which is due to end in March 2021.
She added: “It’s important to have clarity on the future of the Help To Buy Scotland scheme, sooner rather than later, so that the potential for market disruption is avoided if the scheme ends and/or new arrangements are put in place.”
UK Finance is engaging with the Scottish government’s debate on Housing Beyond 2021, while Bennett stressed that private finance is key in helping to meet housing targets.
Bennett was critical of the rise in Land and Building Transaction Tax (stamp duty equivalent) in Scotland from 3% to 4%, which happened in January.
She said: “We are seeing the impact of regulatory and other fiscal change on the buy-to-let sector, and there is a concern that an unintended consequence of the changes could be professional landlords leaving the sector, impacting the private rented sector more broadly and putting more pressure on people’s housing choices.”
