Miles’s recommendations loosely fall into two groups.
Firstly, his conclusions focus on the advice and information consumers receive and a more transparent pricing structure.
Secondly, Miles also looked at cost-effective risk handling for mortgage lenders.
Miles concluded: “In many ways the UK mortgage market works well. It is a dynamic and innovative market.’
He went on to comment: “How mortgages are made commercially viable should not rely on price discrimination and cross-subsidisation. It is wrong to believe that the only way that new borrowers can have a profile of payments that matches their likely income is one that also exposes them to substantial interest rate risk.”
Among other things, Miles said consumers were too short-termist in their enthusiasm for cheap-rate mortgages when other considerations, like interest rates, also have a bearing on the long-term cost to the consumer.
Miles’ recommendations
Lenders must make all products available to new and old borrowers and offer annual product lists to promote rate awareness
Mortgage advisers should help consumers assess personal risk levels with ‘what if’ scenarios
Fixed rate products should be treated like insurance for tax purposes
Building societies may drop levels of funding from savings to 25 per cent from 50 per cent
‘Covered bonds’ receive legislative reform.
